Custom, Excise & Service Tax Tribunal
Rapport Outdoor Advertising Pvt Ltd vs Commissioner Of Service Tax-Iii Mumbai on 6 June, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
MUMBAI
REGIONAL BENCH - COURT NO. I
Service Tax Miscellaneous Application No. 86447 of 2025
(on behalf of Appellant/Respondent)
In Service Tax Appeal No. 86281 of 2017 (Arising out of Order-in-Original No. 22-23/STA-I/SN/16-17 dated 07.03.2017 passed by the Commissioner of Service Tax Audit-I, Mumbai) M/s Rapport Outdoor Advertising Pvt. Ltd. .... Appellant Phoenix Mill Complex, 3rd Floor, S.B. Marg, Lower Parel, Mumbai - 400013 Versus Commissioner of Service Tax, Mumbai-III .... Respondent Lotus Infor Centre, Near Parel Station, Parel (East), Mumbai - 400 012 AND Service Tax Appeal No. 86281 of 2017 (Arising out of Order-in-Original No. 22-23/STA-I/SN/16-17 dated 07.03.2017 passed by the Commissioner of Service Tax Audit-I, Mumbai) M/s Rapport Outdoor Advertising Pvt. Ltd. .... Appellant 4th Floor, Chhibber House, Sakinaka, Andheri (East), Mumbai - 400 072 Versus Commissioner of Central Goods & Service Tax, .... Respondent Mumbai East 9th Floor, Lotus Infor Centre, Parel Station Road, Parel (East), Mumbai - 400 012 Appearance:
Shri A.R. Krishnan, C.A. with Shri Srikant Shenoy, C.A. for the Appellant Shri Dhananjay Dahiwale, Authorized Representative for the Respondent CORAM:
HON'BLE MR. S.K. MOHANTY, MEMBER (JUDICIAL) HON'BLE MR. M.M. PARTHIBAN, MEMBER (TECHNICAL) FINAL ORDER NO. A/85930/2025 Date of Hearing: 06.06.2025 Date of Decision: 06.06.2025 2 ST/86281/2017 Per: S.K. Mohanty The applicant-appellants have filed this miscellaneous application, seeking change of name and address of the respondent as well as the address of the appellants in the cause title to the appeal filed by the appellants. The prayer made by the applicant-appellants is considered and accordingly, Registry is directed to incorporate the following changed name and address of the respondent as well as address of the appellants in the appeal records for the purpose of disposal of the appeal:-
"Commissioner of Central Goods & Service Tax, Mumbai East 9th Floor, Lotus Info Centre, Parel Station Road Parel (East), Mumbai - 400 012". - Respondent And "M/s Rapport Outdoor Advertising Pvt. Ltd.
4th Floor, Chhibber House, Sakinaka, Andheri (East), Mumbai - 400 072" - Appellant The miscellaneous application stands disposed of.
2. Briefly stated, the facts of the case are that the appellants are engaged inter alia, in the activities of 'sale of space services' for advertisement and display of advertisement for specified location and durations. The appellants also provide sale of printed vinyl/flex material to customers for display of advertisements on such locations. For providing the taxable services, the appellants got themselves registered with the Service Tax Department under the taxable entry of "Advertisement Agency Services". In the present case, the appellants had entered into two separate and distinct set of contracts with the client M/s Tata Capital Finance Services Pvt. Ltd., for sale of printed vinyl/flex material and for provision of services of sale of space for display of advertisement. In respect of the agreement entered for sale of printed vinyl/flex material, the appellants had duly discharged Value Added Tax (VAT) liability, considering the same as sale of goods. Whereas, in case of sale of space for display of advertisement, the appellants had considered such activity as 'service' and had duly discharged the service tax liabilities thereon. However, non- payment of service tax on sale of printed vinyl/flex material was disputed by the Department on the ground that such activity is a part of provision of 3 ST/86281/2017 such taxable service and thus, the value of printed vinyl/flex material should be included in the gross value towards the advertisement service, for the purpose of levy of service tax. With such understanding, the Department had initiated show-cause proceedings against the appellants, which culminated into the Order-in-Original dated 07.03.2017 (for short, referred to as 'the impugned order'), wherein the learned Commissioner of Service Tax has confirmed the service tax demand on the appellants. Besides, the impugned order has also confirmed the demand of CENVAT credit availed by the appellants on various input services. Feeling aggrieved with the impugned order, to the extent it has confirmed the service tax demand of Rs.2,91,62,112/- along with interest and imposition of penalty, the appellants have preferred this appeal before the Tribunal.
3. Learned Chartered Accountant appearing for the appellants submitted that printed vinyl/flex material supplied by the appellants to the advertiser was in pursuant to one contract, which is distinct from the other contract entered into between the appellants and the advertiser for provision of sale of space for display of advertisements. Further, he also submitted that in respect of the supply of printed vinyl/flex material, the appellants had already discharged the VAT liabilities. Thus, he pleaded that since the transaction between both the parties are considered as 'sale transaction', the same cannot be termed as provision of services for the purpose of levy of service tax liability thereon. In this context, learned C.A. has relied upon the Final Order No. 70123/2025 dated 10.03.2025 passed by the Allahabad Bench of the Tribunal, in the case of Origin Advertising Pvt. Ltd. Vs. CGST and the Final Order No. 40021-40023/2025 dated 05.01.2024 passed by the Chennai Bench of the Tribunal in the case of Ad- inn Innovative Advertisers Vs. CCE. He has also placed reliance on the Final Order No. A/85736-85740/2025 dated 22.04.2025 passed by the Tribunal in the case of Arpanna Automotives Pvt. Ltd. Vs. Commissioner of CGST, Thane and Schindler India Pvt. Ltd. Vs. CST - (2023) 157 Taxmann.com 152 (Mumbai-CESTAT), to state that where VAT has been paid on certain activities, the same cannot be subjected to levy of service tax, considering the same as a taxable service.
4. On the contrary, the learned Authorized Representative (A.R.) appearing for the Revenue reiterated the findings recorded in the impugned order and further submitted that since the printed vinyl/flex materials were supplied by the appellants pursuant to the advertisement 4 ST/86281/2017 activities, such expenditure incurred on account of procurement of the goods should form the part of gross value for the purpose of levy of service tax thereon. To support such stand, the learned AR has relied upon the judgment of Hon'ble Kerala High Court, delivered in the case of Commissioner of Central Excise & Customs Vs. Zodiac Advertisers - 2009 (13) S.T.R. 593 (Ker.).
5. Heard both sides and examined the case records, including the written submissions filed at the time of hearing of the appeal.
6. We have examined the contracts entered into between the appellants and their client M/s Tata Capital Finance Services Pvt. Ltd., in respect of supply of printed vinyl/flex material and also for sale of space for display of advertisements. The appellants had entered into separate and distinct contracts, one for provision of services, on which service tax liability was discharged by them; and in respect of the other contract, involving sale of goods, they had also discharged the VAT liability levied under the State legislation. For ascertaining the facts, whether the printed vinyl/flex materials were sold by the appellants, we have examined the tax invoices available in the appeal records. As a test check, we find that the suppliers of flex materials M/s S.DAC Technologies Pvt. Ltd. had issued a tax invoice dated 28.10.2013 containing therein the purchase order reference placed by the appellants. In the said invoice, the supplier of flex material had claimed VAT at the requisite percentage on the value of the goods supplied by them. Further, we also find that flex material purchased by the appellants from the said supplier was in turn, sold by the appellants to their client M/s Tata Capital Finance Services Pvt. Ltd., vide their invoice No. 540/30006 dated 05.12.2013, again by charging VAT in the said invoice issued to the said client. Thus, it is evident that supply of such printed vinyl/flex material is purely a 'sale activity', and since a separate contact was executed with the client for supply of the same, the value of such supplied goods therein shall not be included in the value of the service for payment of service tax thereon. Further, the amount received by the appellants towards sale of printed vinyl/flex material is not towards the provision of any advertising services, as they had not undertaken any activity like designing, visualizing, conceptualizing etc., of the advertisements. We find that the issue involved in the present case has adequately been dealt with by the coordinate Bench of the Tribunal in the 5 ST/86281/2017 case of M/s AD-inn Innovative Advertisers & Ors. (supra). The relevant paragraphs in the said order are extracted herein below: -
"11.2 In this regard, the invoice No. I-417 dated 02.06.2006 issued to M/s. Getit Infomediary Ltd. was examined and it is noticed that the Appellant has paid Service Tax on that portion of the bill relating to Hoarding /tie up charges which has been specified clearly and in respect of Flex Printing of the Hoarding, only VAT has been paid. Regarding issue at 9(i) above, we find that there are a catena of judgements wherein it was held that if VAT has been paid on the value indicated in the invoice, it tantamounts to sale on which no service tax is leviable. In the case of Image Creative Pvt. Ltd. Vs. Commissioner of Service Tax [2008 (9) STR 337 (SC)] it was held as follows:-
"28. Payments of service tax as also the VAT are mutually exclusive. Therefore, they should be held to be applicable having regard to the respective parameters of service tax and the sales tax as envisaged in a composite contract as contra distinguished from an indivisible contract. It may consist of different elements providing for attracting different nature of levy. It is, therefore, difficult to hold that in a case of this nature, sales tax would be payable on the value of the entire contract; irrespective of the element of service provided. The approach of the assessing authority, to us, thus, appears to be correct.
34. We may notice that the concept of aspects theory which had found echoes in State of U.P. Another v. Union of India & Anr. [(2003) 3 SCC 239] has expressly been overruled by a Three Judge Bench in Bharat Sanchar Nigam Ltd. (supra) stating :
"78. But if there are no deliverable goods in existence as in this case, there is no transfer of user at all. Providing access or telephone connection does not put the subscriber in possession of the electromagnetic waves any more than a toll collector puts a road or bridge into the possession of the toll payer by lifting a toll gate. Of course the toll payer will use the road or bridge in one sense. But the distinction with a sale of goods is that the user would be of the thing or goods delivered. The delivery may not be simultaneous with the transfer of the right to use. But the goods must be in existence and deliverable when the right is sought to be transferred.
79. Therefore whether goods are incorporeal or corporeal, tangible or intangible, they must be deliverable. To the extent that the decision in State of U.P. v. Union of India held otherwise, it was, in our humble opinion erroneous."
35. For the reasons aforementioned, the impugned judgment cannot be sustained. It is set aside accordingly. The Appeal is allowed. No costs."
Since the Appellant has discharged VAT and Service Tax on the relevant portions of Sale or Service, as the case may be, demand of Service Tax in respect of sale transactions is not legal and so cannot be sustained."
xxxx xxxx xxxx 11.5 Further, we find that the lower adjudicating in Para 17 of the impugned order computed the differential value from the Appellant‟s financial statements without analysing in detail whether the Appellant was indulging in making and preparation of the advertisements involving conceptualization, visualization and designing. As such, inference drawn and findings are devoid of merits in the light of various decisions rendered as discussed in above paragraphs.
11.6 After appreciating the evidence and following the judicial precedents, 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 6 ST/86281/2017 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."
7. The ratio of the judgment of Hon'ble Kerala High Court in the case of Zodiac Advertisers (supra) relied upon by the learned AR for the Revenue is distinguishable from the facts of the present case, inasmuch as in the said decided case, the advertisement materials were sold to the customers in the form of banner/hoarding, film slide and the same were in context with the advertisement services. However, contrary is the situation, in the case in hand, inasmuch as the appellants had entered into two distinct and separate agreements with the clients, one exclusively for supply of the goods and other for provision of advertisement services. Since in the first agreement, there is no whisper about provision of any service, it cannot be said that the material supplied/sold to the client will also form part of the taxable value, for the purpose of levy of service tax thereon.
8. In view of the foregoing discussions, we do not find any merits in the impugned order, insofar as it has upheld confirmation of the adjudged demands of Rs.2,91,62,112/- along with interest and penalty on the appellants and as such, the impugned order to such extent, is set aside and the appeal is allowed in favour of the appellants.
(Dictated and pronounced in open court) (S.K. Mohanty) Member (Judicial) (M.M. Parthiban) Member (Technical) Sinha