Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Central Excise vs Team Upd Ltd. on 18 October, 2004
Equivalent citations: 2006[3]S.T.R.427
ORDER P.G. Chacko, Member (J)
1. Examined the records and heard both sides. It appears from the records that, during the period January, 1997 to March, 2002, the respondents had leased out their site at Trisoolam, Chennai to two parties, namely, M/s. Pepsico India Holdings Pvt. Ltd. (hereinafter referred to as PEPSICO) and M/s. Laqshya Media (P) Ltd. (hereinafter referred to as LAQSHYA) for display of their advertisements. They had collected Rs. 8,37,734/- and Rs. 11,47,500/- towards rental from PEPSICO and LAQSHYA respectively. The department demanded service tax on these amounts from the respondents by treating them as Advertising Agency. These demands were contested. The original authority confirmed these demands against the assessee. An appeal was preferred to the Commissioner (Appeals) and the same was allowed. Hence the present appeal of the Revenue.
2. Ld. SDR reiterates the grounds of this appeal and submits that the decision of the Commissioner (Appeals) based on the Board's Circular No. 341/43/96-TRU, dated 31.10.96 is not correct in view of the Tribunal's decision in Zee Telefilms Ltd. v. CCE Mumbai . On the other hand Id. Counsel for the respondents argues in defence of the impugned order by relying on Trade Notice No. 99/GL/90/CE/PRO/CAL-II/99, dated 16.9.99 of the Calcutta Central Excise Commissionerate as well as the following case law:
(i) CCE Ludhiana v. Azad Publications
(ii) CCE Kol-V v. The Incoda
(iii) Contact Advertising Agency v. CCE
(iv) Star Neon Sign v. CCE .
3. After examining the records carefully, I find that the challenge in this appeal of the Revenue is only in respect of the service tax on the rent received by the assessee from PEPSICO. There seems to be no challenge in relation to LAQSHYA. In this background, I have perused the terms of the relevant lease agreement between the respondents and PEPSICO, available on record. Under this agreement, the respondents received US $ 40,000 per annum towards rental for the aforementioned advertisement site. Another noteworthy condition of this agreement reads as under:
UPD shall print the skin for both the sides of the billboard, as per design sent by Pepsi. The cost of the skins is included in the price as in point No. 1. It appears from the above lease agreement that the advertisements to be displayed on the billboard installed and maintained by the respondents were designed by PESICO. In this connection, I must read the Trade Notice relied on by the Counsel. This Trade Notice reads as under:
Trade Notice No. 99/GL-9Q/CE/PRO/CAL-II/99, dated 16.9.1999 of the Calcutta Commissionerate-
Attention of the Trade and Field Formations are invited to the fact that, doubts have been raised as to whether persons engaged in the activity of compilation, printing and publishing of telephone directories. Yellow pages and business directories are covered under the definition of 'advertising agency' and accordingly liable to pay service tax.
2. The matter has been examined by the Ministry of Finance, Department of Revenue (Tax Research Unit), it has been decided that in the case of persons, who are printing and publishing telephone directories, Yellow pages or business directories, their activity is essentially of printing a ready-made advertisements from the advertisers and publishing the same in the directory. Their activities are similar to those carried out by newspaper or periodicals. As such, this activity shall not attract service tax. However, if these persons also undertake any activity relating to making or preparation of an advertisement, such as designing, visualising, conceptualising etc., then they will be liable to pay service tax on the charges made thereon.
The above Trade Notice exempted "Printers and Publishers" of Telephone Directory's Yellow pages from the purview of service tax by holding that such persons who were engaged in the activity of printing ready-made advertisements on Yellow pages were not covered under the definition of "advertising agency" for service tax purpose. The Trade Notice, however, mentioned an exception, which has been relied on by the Id. SDR today. This exception is to the effect that, if the aforesaid persons are also engaged in the activity of designing, visualising, conceptualising, etc., of advertisements, they will be liable to pay service tax on the charges raised thereon. It is easy to note that among the three activities, namely, designing, visualising, conceptualising stated in the Trade Notice 'designing' should succeed the other two inasmuch as conceptualisation and visualisation are preparatory to the physical activity of designing. In the instant case, PEPSICO designed the advertisements, which implies that the conceptualisation and visualisation of the advertisements were also done by them. Therefore, the instant case does not fall within the field of the above exception in the Trade Notice. It, then, must belong to the general area covered by the Trade Notice. Accordingly, the benefit of the Circular is available to the respondents. On a perusal of the Tribunal's decision in Contact Advertising Agency (supra), I note that the Delhi Bench of the Tribunal took note of Board's Circular dated 16.8.1999 (which apparently formed the basis of the aforesaid Trade Notice) and held that service tax was attracted only on those advertising agencies which were providing service to the advertisers by conceptualising, designing or preparing advertisement. In the case of Azad Publications (supra), the same Bench held that the display of advertisement by the assessee on its site for rental charges did not attract levy in the form of service tax. This decision has been followed in the case of the Incoda (supra). The Tribunal's decision in the case of Star Neon Sign (supra) is also to the same effect.
4. In the result, the impugned order upholding the case of the respondents is affirmed and the Revenue's appeal is rejected.