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: B. RAVICHANDRAN
For Petitioner: J. Shankarraman and S. Sivaramakrishnan, Advocates And For Respondents: K. Veerabhadra Reddy, JC (AR)
1. The appellant is aggrieved by order dt. 22.10.2009 of Commissioner of Service Tax, Chennai.
2. The appellants are engaged in the business of canvassing advertisements for publications like Daily Thanthi, Rani Weekly and getting fixed retainership fee for their work. Revenue entertained a view that the activities of the appellant are liable to be taxed under Business Auxiliary Service in terms of Section 65(19) of the Finance Act, 19994. It was alleged that the appellants were promoting business of these tw
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o publications by the activities of getting consideration from them. Accordingly, original authority confirmed service tax liability of Rs. 53,40,000/- with interest covering the period 1.4.2005 to 31.1.2008. He also imposed penalty of Rs. 55 lakhs on the appellant under Section 78 of the Finance Act, 1994.
3. Ld. counsels appearing for the appellant submitted that the Board's clarification dt. 28.10.2003 and further clarification dt. 23.8.2007 dealt with activities of the appellant. All along it is the view of the Revenue that the space selling activity of any person should be dealt with as part of advertising agency services. The earlier clarification is not to include such activity for taxation which was later withdrawn in 2007 to apply applicable tax under advertising agency service. The present proceedings to tax them under 'Business Auxiliary Service' is not tenable in as much as they are not involving in any promotional activity of services on commission basis. They getting only a fixed retainership fee from the clients and they do promote advertising activity of the clients. Ld. counsel contested the demand on limitation also. He submits that show cause notice dt. 24.4.2008 is issued invoking extended period. As narrated above, the whole activity of the appellant is subject matter of clarification and further clarification of the Board and now a new tax levy under BAS is confirmed against them though they are essentially involved in the activities with reference to advertisement, though not as an advertising agency. He pleaded that there is case for interpretation of statute and as such no mala fide can be attributed to sustain demand of extended period.
4. Ld. A.R. contested the appeal both on merit as well as on limitation. He submits that clarifications relied upon by appellant are not relevant to the activities of business promotion which was undertaken by the appellant. Admittedly, appellant canvassed for more business for their clients. Though the activity may be with reference to advertisement, it is nothing but promotion of advertising services rendered by clients. It is not an activity of space selling as the appellant is not involved in any advertisement in any manner. He submits that activities are clearly covered under BAS. Since, appellant did not pay service tax in violation of the provisions, the extended period is correctly invoked.
5. We have heard both sides and perused the appeal records. Admittedly, appellant is not a space selling agent. They have got fixed retainership fee from the clients and their activities, as can be seen from appeal papers, are relating to general promotion of advertisement revenue of the clients. Though promotion is with reference to advertisement revenue, it is not taxable service under advertising services as has been repeatedly clarified by the Board. We note that the tax entry with reference to advertising agency and also auxiliary activities of space selling has no relevance to the activities of the appellant in the present case. The appellants are engaged in improving advertisement revenue of the client. In other words, they are promoting the services of clients. Such service on the part of the client is exempted by itself will not make the appellant as not providing any taxable service. The overall ambit of Business Auxiliary Service which includes promoting or marketing of services provided by the client, is clear enough to cover the activities of the appellant. As such we hold that appellants are liable to tax under 'Business Auxiliary Service'.
6. However, appellant's case against limitation has considerable force. The appellants are engaged in a singular activity of promoting advertising in the client's publication. It is clearly possible that same could have been considered as part of auxiliary advertising agency service, a bona fide belief entertained by the appellant. It is very much clear from various clarifications issued by the Board, which were relied upon both the appellant as well as Revenue, that the issue involved is certainly one of interpretation. It is also to be noted that appellant acquired business from M/s. Sovereign Media marketing (P) Ltd. who was never subjected to service tax for the same activities. This admittedly led to bona fides of the appellant. We find in such a situation, the defence of appellant against extended period as well as imposition of penalty under Section 78 merits consideration and the liability on that count cannot be sustained. In view of above analysis, we uphold the tax liability of the appellant and hold that the same is restricted to normal period without any penalty on the appellant.
Appeal is partly allowed on the above terms