The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Chennai Bench observed that service tax is not leviable on advertising materials like glow sign boards, flex printing etc, on which VAT is paid.
The Department was of the view that the Appellant had paid Service Tax on some transactions and in most of the transactions, they had paid VAT even though the job involved was similar in nature involving arrangements for installing the advertisement arches, signage boards, etc. at various places part from preparing them and the services rendered thereon appeared to fall under the category of “Advertising Agency” in terms of Section 65(3) of the Finance Act, 1994.
The Department noted that scope of the definition of taxable service is also wide enough to cover “any service” rendered in any manner in relation to advertisement and therefore it appeared that products of Ad-inn are advertisement as defined under Section 65(2) of the Finance Act and they were liable to pay Service tax on the taxable value under the category of Advertising Agency service.
The counsel for the appellants submitted that every service rendered is not subject to levy of Service Tax and only taxable service is subject to levy of Service Tax. In this regard the counsel referred the decision in the case of Zodiac Advertisers Vs. Commissioner of Central Excise in which the Tribunal, Bangalore held that in the absence of any creativity relating to preparation, making and display undertaken by the Appellants, mere manufacture of products as per instructions of the service receiver would not bring them under the definition of “Advertising Agency”.
It was further submitted that, as they were printing the matters supplied by the clients, they were not liable to pay service tax on the activities relating to printing of materials either on paper or cloth or flex. Printing of flex is also not liable to be taxed as no creativity was involved therein and the advertisement materials in the flex were not conceptualised or designed by the Appellant but are just printing the matter.
A Two-Member Bench comprising Vasa Seshagiri Rao, Technical Member and CS Sulekha Beevi, Judicial Member observed that “We are inclined to hold that the advertising materials like glow sign boards, flex printing, broachers, stickers, tags, posters, hand bills, signages, etc., which cater to the requirements of the specific customers, on which VAT is paid, is not leviable to Service Tax. We are also of the view that Service Tax cannot be demanded in respect of cloth banners and wall painting transactions without first analyzing the nature of work undertaken by the appellant in detail.”
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