The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad bench has held that the activity of printing of advertisement content on PVC materials amounts to “manufacture”, and therefore, service tax is not leviable.
The respondent-assessee, Macro Media Digital Imaging Pvt. Ltd is engaged in the business of “wide format printing”. It has no role in conceptualization or in making or creation of designs for advertisements to be printed for customers. The customers provide the “ready to print” advertisement content and the respondent undertakes the printing of such content on PVC material procured by the respondent from the open market. The respondent has no authority from the customers for making any changes since the scope of the activity is limited to printing. Thus, according to the respondent, it has no role in the “making of the advertisement”.
The service tax department demanded tax from the respondent-assessee holding that the above activity would amount to taxable service.
On first appeal, the Commissioner, relying on various decisions of the Tribunal and the Circulars issued by the Board, held that the activity of printing of flex banners by the respondent as per the requirement of the customers and selling the same to the customers would not be covered under the scope of the “advertising agency” services for the period prior to 01.07.2012 and even for the period post 01.07.2012, the activity undertaken by the respondent, being merely transfer of goods by sale which is subject to Sales Tax/VAT on the full value, is excluded from the scope of the service tax under section 65B (44)(a)(i) of the Finance Act.
Upholding the order of the first appellate authority, Justice Dilip Gupta, President and Mr. P.V. Subba Rao, Member (Technical) observed that “In so far as levy of service tax on printing activity is concerned, the Commissioner was justified in holding that it would not be subjected to levy of service tax. In the first instance the activity of printing of advertisement content on PVC material which results into printed PVC flex or PVC board would amount to manufacture and, therefore, would not be leviable to service tax. Secondly, the appellant has not challenged the findings of the adjudicating authority on this aspect.”
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