The Allahabad bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that the demand of service tax under ‘Advertisement Service’ is invalid in absence of evidence to show engagement in making or preparing or advising for advertisement.
M/s Noida Publicity Agency, the appellant challenged the order passed by the Pr. Commissioner, Central Tax, Noida whereby demand of Service Tax, penalties and Late fee were confirmed.
The Appellant is a partnership firm and Shri Sanjay Adhlakha and his wife Smt Renuka Adhlakha are partners of the said firm. The Appellant was engaged in the business of Advertisement Agency Service and ‘Selling of Space for Advertisements’. The Appellant was doing the business of advertisement agency service and was paying service tax on the aforesaid activities. The Appellant had obtained subcontract from M/s Chinar Impex, C-22/4, Sector-57, Noida for constructing and maintaining Bus Shelters, Foot Over Bridges and Toilets ( Public Utilities ) etc. which were awarded from Noida Authority to M/s Chinar Impex, on Build Operate Transfer ( BOT ) basis and in turn obtained right for advertisement on such constructed structures from awarding agencies for a specified period.
The nature and module of the business of the Appellant was that they allowed different clients to display advertisement on pre-assigned space of the structure constructed by M/s Chirag Impex on rental basis. The consideration from clients was charged on the basis of time period for displaying the advertisement, site of advertisement, location, area of space etc. The advertisement material such as flex banner were printed by the clients itself. The Appellant was never engaged in printing flex banners for displaying the advertisements on such preassigned spaces.
The services provided by the Appellant were restricted only to selling of space for the advertisements and only in some cases ancilliary activities like mounting and installation of printed material provided by clients were placed on the hoardings/Bill boards. The Appellant maintained the hoardings/bill boards etc. so that the wear and tear of the structure could be taken care of from time to time. Electricity was arranged by the Appellant making the advertisement visible at night at it’s own cost and expenditure. No separate consideration was charged for maintenance and electrification.
The Appellant contested the Show Cause Notice and clarified that services rendered by them were ‘Selling of Space’ only. The Appellant was not carrying out any activities in relation to creation of advertisement. The Appellant did not have any role in preparation of advertisement. It was also clarified that the demand was barred by limitation as nothing was suppressed and invocation of extended period was not sustainable.
Shri Abhinav Kalra, Chartered Accountant represented the case on behalf the Appellant and contended that services rendered by the Appellant were not chargeable to service tax with effect from 01.10.2012 as services provided by them were under the category of ‘Sale of Space for Advertisement’ which were in the Negative List as provided under Section 68(g) of the Finance Act, 1994 during the period from 01.07.2012 to 30.09.2014 but the same was rejected by the Adjudicating Authority without any proper ground.
It was stated that non-mentioning of ‘Sale of Space for Advertisement’ service in ST-2 certificate of the Appellant does not indicate that the said service was not rendered by him. It was argued that displaying of advertisement on a place through hoarding, bill board etc was also a mode of advertisement but on account of entry under Section 66D(g) the selling of space for advertisement was exempted from service tax as the said service was in Negative list.
A two member bench comprising Mr P K Choudhary, Member ( Judicial ) And Mr Sanjiv Srivastava, Member (Technical) observed that it is evident from the details given in above invoices that the Appellant was not engaged in designing and conceptualising advertisement. So, they were not covered under the taxable services.
In the case of Team UPD Ltd, the Tribunal held that display of advertisement on a site for rental charges is not covered under ‘Advertising Agency’ service. The CESTAT set aside the demand of Service Tax alongwith applicable interest. The penalty imposed under Section 78 on the Appellant firm and under Section 78A on the partner Shri Sanjay Adhlakha are set aside.
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