At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Chennai
By, THE HONORABLE JUSTICE: SULEKHA BEEVI C.S.
By, MEMBER AND THE HONORABLE JUSTICE: MADHU MOHAN DAMODHAR
For Petitioner: K.P. Muralidharan, AC (AR) And For Respondents: J. Shankararaman and S. Sivaramakrishnan, Advocates
1. The above appeal is filed by the department aggrieved by the order passed by Commissioner (Appeals) who set aside the demand, interest and the penalties imposed.
2. Brief facts are that during the course of audit, Malar Publications Ltd. for the period February 2008, it came to light that M/s. Sovereign Media Marketing (P) Ltd. (respondents herein) have canvassed advertisements for Maalai Malar (published by Malar), Daily Thanthi and Rani weekly upto 31.3.2015 and that Malar Publications have taken over the business of respondents herein with effect from 1.4.2005. The department was of the view that the commission received for canvassing such advertisement falls within the ambit of business auxiliary service and that the respondents are liable to pay service tax with effect from 1.7.2003. Show cause notice was issued proposing to demand service tax along with interest and for imposing penalties. After due process of law, the original authority held the activity of canvassing for advertisement in the publications stated above as taxable service under the category of business auxiliary service and confirmed the demand, interest and imposed penalty under section 78. In appeal, Commissioner (Appeals) set aside the demand. Hence department has filed the present appeal.
3. On behalf of Department, ld. AR Shri K.P. Muralidharan reiterated the grounds of appeal. With effect from 1.7.2003, BAS has been brought into the ambit of service tax. Section 65(19) of the Finance Act defines the said services to include services relating to promotion or marketing or sale of goods produced or provided by or belonging to the client or promotion or marketing of service provided by the client. When advertisements are made through print media, the advertisement agency acts like an agent to its clients. They receive commission charged by the advertisement agency which is generally equal to the discount offered by the print media during to the advertisement agency and the commission is the fee charged by the agency for agency business. In view of the above, the service rendered by the respondent is similar to commission agent and rightly classifiable under BAS. Even though it is fixed as retainer fee/commission between the parties, it is actually consideration for rendering the canvassing service on commission basis. Board by Circular No. 96/7/2007-ST dated 23.8.2007 has clarified that such consideration is subject to levy of service tax. Further vide circular F. No. 332/4/2008-TRU dated 5.5.2008, it has been clarified that the commission earned by the advertisement agency is leviable to service tax. The activity of canvassing for advertisement in the publications Daily Thanthi, Rani Weekly undertaken by the respondent are nothing but promotion or marketing of advertisement service and rightly falls under BAS. The Commissioner/retainer fee received from the client during the period 1.7.2003 to 31.3.2005, thus is subject to levy of service tax. The Commissioner (Appeals) has relied upon the stay order No. 566/2010 dated 8.11.2010 passed by the Tribunal in the case of M/s. Malar Publications to conclude that the services are not subject to levy of service tax. The said case has attained finality and vide Final Order No. 4018/2018 dated 22.1.2018, the Tribunal has held that the said activities would fall within the ambit of BAS. Therefore, the order passed by the Commissioner (Appeals) is erroneous as he has relied upon the stay order. He pleaded that impugned order may be set aside.
4. The ld. counsel Shri J. Shankararaman assisted by Shri S. Sivaramakrishnan appeared and argued for the respondent. He submitted that the respondent namely M/s. Sovereign Media Marketing (P) Ltd. has been taken over by the Malar Publications with effect from 2005. The said order which was relied by the Commissioner (Appeals) was in respect of Malar Publications on the very same issue. The Tribunal vide above stated final order, though held the issue against the respondent has set aside the demand on the ground of limitation. The period involved in the said final order was subsequent to the period in the present case. The period involved in the said final order was from 1.4.2005 to 31.1.2008 whereas the period involved in the present case is from 1.7.2003 to 31.3.2005. He argued that there was much confusion with regard to levy of service tax of retainer fee on the commission received since there were circulars issued by the Board initially in 2003 which stated that the said services of advertisement agency is not subject to levy of service tax. There was also a decision of the Bangalore Bench in the case of Rex Advertisers Vs. Commissioner of Service Tax, Bangalore reported in 2006 (2) STR 330 wherein the issue of selling of space was considered and held to be in favour of the assessee. Thus, since the Tribunal has set aside the demand on the ground of limitation for the subsequent period, the same could be applicable to the period in the present case also. He submitted that the entire issue is one of interpretation of law and no mala fide can be attributed on the respondent.
5. Heard both sides.
6. The issue whether the services are subject to levy of service tax has been considered in the case of Malar Publications vide the above stated final order wherein it is held that the said activities fall within BAS. However, we find that the Tribunal for the subsequent period has set aside the demand on the ground of limitation. The Tribunal in the said decision has analyzed that there was no s
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uppression on the part of the appellant with intent to evade service tax and that the issue was one of interpretation. Further, there were several circulars issued by the Board with respect of levy of service tax on advertisement service/activities of advertisement agency/print media etc. Therefore, taking note of the fact that the issue was interpretational and there being no mala fide established against the respondent, we are of the view that the order passed by the Commissioner (Appeals) is legal and proper which requires no interference. The impugned order is upheld and the appeal filed by Revenue is dismissed.