Custom, Excise & Service Tax Tribunal
Secunderabad - G S T vs Macro Media Digital Imaging Pvt Ltd on 14 September, 2022
Author: Dilip Gupta
Bench: Dilip Gupta
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
HYDERABAD
REGIONAL BENCH
SERVICE TAX APPEAL NO. 23542 OF 2014
(Arising out of Order-in-Original No. HYD-EXCUS-003-COM-20/14-15 dated
18.07.2014 passed by the Commissioner of Central Excise, Hyderabad)
Commissioner of Central Excise, ...Appellant
Hyderabad-III Commissionerate, Hyderabad
versus
Macro Media Digital Imaging Pvt. Ltd. ...Respondent
147/D, Secto-I, Line-1, Phase-II,
Cherlapally IDA, Hyderabad- 500051
(Telangana State)
Appearance
Mr. V.R. Pavan Kumar, Authorized Representative of the Department
Mr. S. Thirumalai, Advocate for the Respondent
CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL)
Date of Hearing: 04.05.2022
Date of Decision: 14.09.2022
FINAL ORDER NO. A/30086/2022
JUSTICE DILIP GUPTA:
The Department has filed this appeal to assail the order dated
18.07.2014 passed by the Commissioner of Customs, Central Excise
and Service Tax, Hyderabad1, by which the proceedings initiated by
show cause notices dated 22.10.2012 and 12.05.2014 have been
dropped.
2. The first show cause notice dated 22.10.2012 was issued for the
period April 2007 to March 2012 calling upon M/s. Macro Media Digital
1. the Commissioner
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Imaging Private Limited 2 to pay service tax on „advertising agency‟
services with interest and penalty. The second show cause notice
dated 12.05.2014 was issued for the subsequent period from April
2012 to March 2013.
3. According to the respondent, it is engaged in the business of
„wide format printing‟. It has no role in conceptualization or in making
or creation of design for advertisement 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‟.
4. However, a show cause notice dated 22.10.2012 was issued to
the respondent for recovery of service tax for the period April 2007 to
March 2012. The show cause notice was issued to show cause as to
why-
a. An amount of Rs. 21,66,58,906/- (including cesses)
should not be demanded from them towards service
tax payable on account of „Advertisement Services‟
provided by them under section 73(1) of the Finance
Act, 1994 read with the proviso thereto:
b. Interest at the applicable rates should not be paid by
them under the provisions of section 75 of the
Finance Act, 1994 on the amount demanded at (i)
supra.
c. Penalty should not be imposed on them under
section 76 of the Finance Act, 1994 for the
2. the respondent
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contravention of statutory provisions, as detailed
supra during the period prior to 10.05.2008.
d. Penalty should not be imposed on them under
section 77 of the Finance Act, 1994 for the
contravention of statutory provisions, as detailed
supra.
e. Penalty should not be imposed on them under
section 78 of the Finance Act, 1994 for mis-
statement, suppression of facts and contravention of
provisions of chapter V of the Finance Act or the
rules made there under, with intent to evade
payment of service tax as detained in the notice.
5. The relevant portion of the show cause notice is reproduced
below:
"5. The activity of Macromedia is to provide services
related advertising/marketing campaigns of their
customers though converting digital format
communication media into quality wide format printing.
Though Macromedia claims that they are mainly engaged
in wide format printing on flex banners, they are not
disputing the fact that the printing done only for the
purpose of advertisement. In clear parlance, the assessee,
admittedly is engaged in production and sale of
advertising materials based on orders received from their
customers. xxxxxxxx."
6. This show cause notice was followed by another show cause
notice dated 12.05.2014 for the subsequent period from April 2012 to
March 2013.
7. The appellant filed a detailed reply to the aforesaid show cause
notice. The factual description of the activities undertaken by the
respondent have been stated to be as follows:
9. It is submitted that the noticee is in the
business of 'wide/large format printing wherein the
notice undertakes printing activity for the banners,
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billboard, etc. as per the design content provided by
the customers on PVC/flex materials.
10. In this regard, it is submitted that the noticee's
activity does not involve any designing,
conceptualization of the advertising content but
limited to the printing as per the designs supplied
by the customers. This factual position is not disputed in
the SCN under reply as can be seen from the averments in
para 7. It is pertinent to note here that the noticee is not
even involved in the modification of such designs and
merely checks the printability aspect of the design so
supplied before undertaking the printing activity as per the
customer requirements.
xxxxxxxxxx
11. It is also submitted that the noticee is also
not authorized by the customers for making any
changes in the designs supplied neither having any
specialization in creation or conceptualization of
such design so as to get covered under the term
'making of advertisement. The Purchase orders
received from the customers clearly evidenced that the
activity carried out by the noticee is mere printing of the
materials based on the design and specification provided
by the customers and by no stretch of imagination be
treated as 'making of advertisement'. xxxxxxxxxxxx.
xxxxxxxxxxxx"
8. A similar reply was filed by the respondent to the second show
cause notice dated 12.05.2014.
9. The Commissioner, by order dated 18.07.2014, dropped the
proceedings initiated by the two show cause notices.
10. Shri V.R. Pavan Kumar, the learned authorised representative
appearing for the department, made the following submissions:
(i) In respect to the bills raised by the respondent, the
consumers are deducting TDS which clearly indicates
that the activity undertaken by the appellant is a
service;
(ii) This apart, the respondent have not discharged VAT
on merits, but only under a composition scheme
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which indicates that service is involved in the
transfer of goods;
(iii) From the definition of „advertising agency‟ under
section 65 (3) of the Finance Act, any person
engaged in providing any service connected with the
making, preparation or display of advertisement
would be providing „advertising agency‟ services;
(iv) The Commissioner committed an error in placing
reliance upon the letter of CBEC dated 16.08.1999
granting exemption to persons engaged in printing
and publishing of telephone directories, yellow pages
or business directories;
(v) The Commissioner also committed an illegality in
referring to the Circular dated 23.08.2007 which
clarified that mere canvassing advertisements for
publishing on commission basis is not classifiable
under advertising service; and
(vi) To support these contentions, the learned authorised
representative placed reliance upon the decision of
the Kerala High Court in Commissioner of Central
Excise & Customs vs. Zodiac Advertisers 3 and
the decision of the Supreme Court in the appeal filed
by Zodiac Advertisers, which decision is reported in
Zodiac Advertisers vs. Commissioner of C. Ex. &
Cus., Cochin4.
11. Shri S. Thirumalai, learned counsel appearing for the
respondent, however, supported the impugned order and broadly
made submissions under the following three heads:
'Advertising Agency' services does not include mere
printing of advertisement material
(i) Activity of printing „ready to print‟ advertisement
context on PVC flex material and sale of such printed
material amounts to sale of goods but not a service
and thereby no service tax is payable on the said
activity under „advertising agency‟ service;
3. 2009 (13) S.T.R. 593 (Ker.)
4. 2009 (14) S.T.R. 449 (S.C.)
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(ii) A person shall be considered to be an „advertising
agency‟, if he is engaged in providing any service
connected with making, preparation, display or
exhibition of advertisement. As the activity of the
respondent is printing of „ready to print‟
advertisement content on PVC material and sale of
the same to customers, the plea of the department
that the same would come under the ambit of
„advertising agency‟ is not correct;
(iii) In view of the clarification given by the Calcutta
Commissionerate in the letter dated 16.08.1999, it is
clear that mere printing of „ready-made‟ or „ready to
print‟ advertisement cannot be considered as service
leviable to service tax under „advertising agency‟
services. In order to levy tax on any activity under
„advertising agency‟ services, the activity should be
related to making or preparation of an
advertisement, such as designing, visualizing,
conceptualizing etc. which is absent in the present
case;
(iv) An „advertisement agency‟ basically prepares the
contents of the advertisement material and is
strategically involved in the manner in which the
content of such advertisement is displayed or
exhibited to the targeted public. The legislative
intent is not to tax every activity connected with
advertisement;
(v) The CBEC, by letter dated 23.08.2007, had clarified
that persons/agencies who canvas advertisement for
publishing on commission basis and do not
undertake any activity involving making,
preparation, display or exhibition of advertisement
do not come under the ambit of „advertising agency‟
services;
Printing activity amounts to 'manufacture' and so no
service tax is payable
(vi) The activity of printing of advertisement content on
PVC material resulting into printed PVC flex or PVC
board are considered as products of printing
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industry. Such printing activity results into
„manufacture‟ as defined under section 2(f) of the
Central Excise Act, 1944. These products are
classifiable under the Tariff 4911 10 10 of the
Central Excise Tariff and are exempted from levy of
central excise duty;
No service tax payable from 01.07.2012 onwards as printing
activity is not a 'service'
(vii) The order passed by the adjudicating authority also
sets aside the demand of service tax under the
subsequent show cause notice for the period from
01.07.2012 to 31.03.2013. Though the appellant has
preferred this appeal against the entire order, but no
grounds have been stated in the appeal memo
challenging the findings of the adjudicating authority
that no service tax is payable for this period; and
(viii) The show cause notice for the subsequent period
April 2012 to March 2013 fails to specify under what
charges the respondent was being subjected to
service tax levy under the Negative list-based
taxation effective from 01.07.2012.
DISCUSSION
12. The submissions advanced by the learned authorized
representative appearing for department and the learned counsel
appearing for the respondent have been considered.
13. The issue that arises for consideration is whether the activity of
"wide format printing" and „supply of advertising material to clients‟
based on the designs provided by the clients would amount to
rendering any service. According to the respondent it had no role in
conceptualization or in the making or creation of design for
advertisement to be printed for customers, for the appellant merely
carried out the activity of wide format printing and supply of
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advertisement material to the clients. The customers provided the
„ready to print‟ advertisement content and the respondent undertook
the printing of such content on PVC material procured by the
respondent from the open market. The respondent also contends that
it has no authority from the customers to make any changes in the
advertisement content provided by customers and the scope of the
activity is limited to printing the contents provided by the customers
on the PVC material. Thus, according to the respondent, it has no role
in the „making of advertisement‟. According to the Department, the
work undertaken by the respondent would amount to a service under
the category of „advertising agency‟ service as defined in section 65
(3) of the Finance Act and made taxable under section 65 (105)(e) of
the Finance Act.
14. To appreciate the contentions, it would be appropriate to
reproduce the definition of „advertising agency‟. It is defined under
section 65(3) of the Finance Act as follows:-
"Section 65(3): „advertising agency‟ means any
person engaged in providing any service connected with
the making, preparation, display or exhibition of
advertisement and includes an advertising consultant."
15. It is made taxable under section 65 (105)(e) of the Finance Act
and it is reproduced below:
"Section 65 (105)(e): „taxable service‟ means any
service provided or to be provided to any person, by an
advertising agency in relation to advertisement in any
manner."
16. The Commissioner, after examining the nature of the work
undertaken by the respondent, noted that what was required to be
decided was whether mere printing activity can be considered as
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„advertising agency‟ services only because the printed matter is
advertisement material. After referring to various decisions of the
Tribunal and the Circulars issued by the Board, the Commissioner 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. The relevant
portions of the order passed by the Commissioner are reproduced
below:
20. I have examined the records of the case and the
submissions made by the assessee carefully. The point
for decision is whether or not the assessee is liable
for service tax as advertising agency in respect of
activities undertaken by them. The admitted facts of
the case are that the assessee are undertaking
printing work of flex banners, bill boards etc., as per
the design and content provided by the customers.
They have printing machines for wide/large format
printing. It is also an admitted fact that they are not
involved in any designing, conceptualizing of the
advertising content and their activities are limited to
printing as per the designs supplied by the
customers. The only point on which service tax liability
was sought to be confirmed is that they are engaged in
printing and making advertisement material with the
name, product name, logo or trade mark etc., of the
customers. In other words, they are engaged in
production and sale of advertising material based on
orders received from their customers. Since as per the
definition under Section 65(3) of the Finance Act, 1994,
"advertising Agency" means any person engaged in
providing any service connected with the making,
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preparation, display or exhibition advertisement includes
advertising consultancy and as the assessee are engaged
in production and sale of flex banners, boards containing
the advertisement given by the customers, they are
sought to be included in „Advertising Agency‟. The work
of such agency covers within its ambit any service
connected with making, preparation display or
exhibition of advertisement. The assessees are
involved in printing and selling flex boards and
banners containing advertisements, as such they
are also sought to be included under the category of
Advertising Agency. Support for this was drawn from
the terms 'any service connected with making, preparation
of advertisement'. The assessees strongly contested their
liability for the service tax stating that they are involved in
printing as per the requirements of their customers and
are no way connected with the creation of contents or
subsequent display of the advertisement materials. They
have expertise in printing and they are not involved in any
conceptualization, designing or consultation in advertising
of any product or service of the customers in any manner.
In simple terms, the point for decision is whether a mere
printing activity can be considered as a work of advertising
agency, only because the printed matter is advertisement
material. The thrust given in the show notice that
any person engaged in making advertisement
material should be considered as advertising agency
is misleading.
xxxxxxxxx
24. Board vide letter F.No. 345/4/97-TRU dated
16.08.1999 while examining the service tax liability
of printing and publishing telephone directories,
yellow pages or business directories, clarified that
their activity is essentially of printing a readymade
advertisements from the advertisers and publishing
the same in the directory. Their activities are similar
to those carried out by newspapers 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, visualizing, conceptualizing etc., they
will be liable to pay service tax on the charges made
thereon".
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25. Further, vide circular No.6/7/2007-ST dated
23.08.2007, the Board clarified that merely
canvassing advertisements for publishing on
commission basis is not classifiable under
advertising services.
26. It is also noticed that the printed material is
sold by the assessee to their customers and VAT is
being discharged on the value. The transaction
between the assessee and the customer is
essentially on sale of goods. The processes involved in
preparation of the flex boards and banners resulting in
printed material containing components of advertisement,
can more appropriately be considered as production and
processing of goods for the customers.
27. Considering the above legal position, case
laws and discussion, I find that the activity of
printing of flex banners, boards etc., by the
assessee as per the requirement of the customers
and selling the same to the customers cannot be
covered under the scope of advertising agency for
the purpose of service tax. For the period after
01.07.2012, the activity undertaken by the assessee
being merely transfer of title on goods by sale
subjected to sales tax/vat on the full value is
excluded from the scope of service tax as per
Section 65B(44)(a)(1). As already noted, the only basis
on which the service tax was sought to be levied on the
assessee, is that they are engaged in making and
producing banners and flex boards, containing
advertisements. No other activity has been alleged or
evidenced. It is also not disputed that there is sale
transaction of the said products and material. As such I
find levy of service tax on the assessee based on the
allegation made in show cause notice is not sustainable."
(emphasis supplied)
17. As noticed above „advertising agency‟ has been defined to mean
any person engaged in providing any service connected with the
making, the preparation, display or exhibition of advertisement. It is
not in dispute that in the present case the customers provide the
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„ready to print‟ advertising content to the respondent and the
respondent merely prints the advertisement content on the PVC
material procured by the respondent from the open market. The
respondent has no role at all in the conceptualization or in the making
or creation of design. In fact, the respondent has no authority at all to
even make any changes in the advertisement content provided by the
customers and the respondent merely prints that on the PVC material
procured from the market. This activity would not fall within the scope
of the activity contemplated under section 65(3) of the Finance Act.
18. This issue was also considered in the Trade Notice dated
16.08.1999 issued by the Calcutta Commissionerate. After
examination of the matter, it was decided that where ready made
advertisement provided by the customers is printed and published in
the telephone directory, the activity will not attract service tax and it
is only when persons also undertake any activity relating to making or
preparation of an advertisement that service tax would be levied. The
said Trade noticed dated 16.08.1999 is reproduced below:
"Trade Notice - Service Tax
Trade Notice No. 99/GL-90/C.E./PRO/CAL-II/99
Calcutta Commissionerate
Dated 16-08-1999
Communicated by CBEC through 345/4/97-TRU
dated 16.08.1999
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.
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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 readymade advertisement from
the advertisers and publishing the same in the
directory. Their activities are similar to those carried
out by newspapers 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,
visualizing, conceptualizing etc., then they will be liable
to pay service tax on the charges made thereon."
19. It would also be important to refer to the „Frequently Asked
Questions‟ on Service Tax issued by the Chief Commissioner of
Central Excise, Coimbatore Zone (Third Edition dated 19.06.2006). It
provides that mere publishing of prepared advertisement in a paper or
magazine is not the function of an „advertisement agency‟ and hence
would not fall within the scope of „advertising agency‟ service. The
same is reproduced below:
"Frequently Asked Questions on Service Tax
Chief Commissioner of Central Excise, Coimbatore
Zone - Third Edition dated 19-06-2006
17.15. Advertising agency
Scope:
The taxable service provided or to be provided to a
client by any person in relation to making preparation,
display or exhibition of advertisement i.e., circular, label,
wrapper, document, hoarding or any other audio or visual
representation made by means of light, sound, smoke or
gas for publicity is covered under the category of
Advertising agency service.
Advertisement agency basically prepares content of
the advertisement material for publicity as per the
requirement of the client and/or arranges the space in any
kind of media.
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Inclusion:
The definition of „advertising agency‟ also covers
„advertising consultant‟.
Market research relating to advertisement forms part
of the service in relation to the advertisement.
Exclusion:
Mere publishing of prepared advertisement in a
paper or magazine or broadcast of prepared
advertisement on electronic media by TV or Radio
channel are not the functions of an advertisement
agency. Hence such activities do not fall within the
scope of the Advertisement agency service."
20. It would also be useful to refer to the Master Circular dated
23.08.2007 clarifying technical issues relating to taxation of services.
In respect of the issue as to whether merely canvassing
advertisement for publishing on a commission basis would attract levy
of service tax, the said Circular mentions that it would not be taxable
under section 65(105) (e) of the Finance Act. The relevant portion of
the Circular is reproduced below:
"Circular 96/7/2007-ST dated 23.08.2007
Master Circular clarifying technical issues relating
to taxation of services
Circular No. 96/7/2007-S.T., dated 23.08.2007
F.No. 354/28/2007-TRU
Government of India
Ministry of Finance (Department of Revenue)
Central Board of Excise & Customs, New Delhi
xxxxxxxxxx
Referenc Issue Clarification
e Code
(1) (2) (3)
004.01/ Persons/agencies canvass Merely canvassing
23.08.07 advertisements for publishing, advertisement for
on commission basis. Such publishing, on
persons/agencies do not commission basis,
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provide any other services like is not classifiable
making, preparation, display or under the taxable
exhibition of advertisement. service falling
under section
Whether merely canvassing 65(105)(e).
advertisement for publishing
on a commission basis by Such services are
persons/agencies is classifiable liable to service
as Advertising Agency service tax under business
[section 64(105)(e)] or not? auxiliary service
[section
65(105)(zzb)].
21. It also needs to be noted that the Commissioner has also, after
noticing that the respondent is not involved any designing,
conceptualization of the advertising content and that the activity is
limited to printing as per the contents supplied by the customers and
after placing reliance upon the Trade Notice dated 16.08.1999 and the
Circular dated 23.08.2007, held that the activity undertaken by the
respondent would not fall within the definition of „advertising agency‟.
22. In William Lea (India) Pvt. Ltd. versus Commissioner of C.
Ex., Chennai-IV5, a division bench of the Tribunal held that where
the basic marketing or promotional material as per the approved
design layout has been provided by the Reader‟s Digest to the
appellant therein for getting them printed, and the appellant was only
required to procure material on which it was to be printed, it would
not mean that the service provided by the appellant would fall within
the definition of „advertisement agency‟. The relevant portion of the
decision is reproduced below:
"5.3 The consistent stand of the appellants right from the
reply to the SCN is that contract from Reader‟s Digest is
for sourcing the paper, card, envelopes, cover, etc., from
the market, preparing personalized letters as per the
design given by Reader‟s Digest and then mailing
5. 2019 (25) G.S.T.L. 433 (Tri. - Chennai)
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materials to their customers; that they are not engaged in
preparation or display of advertisement; that they were
only acting as organizing agents; that they had only
purchased paper, card, envelope, cover, etc., from the
market and personalized letter effect was provided by
another service provider; that finally they had only mailed
the said letter to the clients of Reader‟s Digest. We find
that the findings of the adjudicating authority in this
regard are seen in paragraph 11(iii) as under:
(iii) As per the agreements and periodical
work orders, the assessee has undertaken to
print in paper the subject matter of Reader‟s
Digest‟s marketing or promotional material as
per the approved design layout and mail the
material to customers as per the mailing
schedule given by „Reader‟s Digest‟. The
assessee had provided services of procurement
of material including paper, personalizing the
papers, get printed the subject matter, quality
control of the final product and
posting/dispatching the material as per the
mailing schedule. For providing the above
services, the assesssee has outsourced
activities such as printing, scoring, inserting in
covers, etc. Further they have deputed a
person for co-ordinating the entire operations
with the vendors and Reader‟s Digest.
Having made these observations and analyzed the
definitions of "advertising agency service", "business
auxiliary service" and mailing list compilation and
mailing service", the adjudicating authority concludes,
in the same paragraph, that service provided by
appellants to Reader‟s Digest merits classification as
taxable services provided by an advertising agency in
relation to the advertisement under Section 65(105)(e)
of the Act.
5.4. We are unable to fathom these conclusions of the
lower appellate authority. Surely it cannot be said of
the appellants that they had prepared advertising
material on their own. On the other hand, the facts
clearly indicate that the basic market promotional
material as per the approved design lay out by Reader‟s
Digest had been given to the appellants for getting
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them printed in approved material. Appellants were
only required to procure the material including paper,
get the subject matter printed on to such paper with
personalization for individual clients and post/despatch
the material as per the mailing schedule. It cannot also
be said of the appellants that they were engaged in
display or exhibition or for that matter that they were
„Advertising Consultant‟ for Reader‟s Digest."
23. In Zee Telefilms Ltd. versus Commissioner of C. Ex.
(Appeals), Mumbai-IV6, the Tribunal emphasized that the definition
of „advertising agency cannot be read literally out of context and the
relevant portion of the decision is reproduced below:
"Therefore, the definition of „advertising agency‟
cannot be read literally and out of context, if done so then
every person some way connected with an advertisement
will be advertising agency. That cannot be and is not the
coverage of the Service Tax envisaged. In the present
case, one cannot ignore term being defined i.e.
„advertising agency‟ and proceed to levy service tax on-
(i) any commercial concern.
(ii) providing service connected with making,
preparation, display or exhibition of
advertisements.
If the definition is read in isolation and in an all
encompassing manner out of context, then any
person/company employing cameraman connected with
shooting of advertisement film will become an advertising
agency. A caterer supplying tea and biscuits during the
production of advertising film will also become a person
connected with preparation of advertisement and became
an advertising agency. Similarly, a lawyer advising
whether advertising film will be violating copyright law or
other laws relating to obscenity etc. would be treated as
advertising agent. Similarly a broadcaster (on radio or
television) of an advertisement will become an advertising
agency, or a cinema hall flashing an advertisement or
newspaper/magazine publishing an advertisement will
become an advertising agency. Such absurdities, from an
6. 2006 (4) S.T.R. 349 (Tri. - Mumbai)
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interpretation have to be avoided, the term „service
connected with‟ used in the definition of "Advertising
Agency" is to be understood in context of and in a
restrictive manner."
24. Learned authorised representative appearing for the appellant,
however, placed reliance upon the judgment of the Kerala High Court
in Zodiac Advertisers. The High Court held that all commercial
concerns engaged in any of the activities connected with
advertisement, which includes making, preparation displaying or
exhibition of advertisement, answer the description of advertising
agency. The High Court also distinguished the Circular dated
16.08.1999 by observing that in the present case the respondent was
not engaged in printing work only.
25. It further needs to be noticed that against the decision of the
High Court in Zodiac Advertisers, the department filed an appeal
before the Supreme Court and the Supreme Court set aside the order
passed by the Tribunal as well as the High Court. The Supreme Court
remitted the matter to the Tribunal to examine whether the appellant
undertook the work of conceptualising, visualising and creating the
advertisement or whether it was only complying with the instructions
of the clients. The relevant portion of the judgment of the Supreme
Court is reproduced below:
"2. Having heard learned counsel on both sides, we
are of the view that an important question of law does
arise in this case, namely, whether an assessee comes
within the definition of the word „advertising agency‟ as
defined in Section 65(3) of the Finance Act, 1994 as
amended.
3. However, on perusing the record, we find that
material documents, particularly, orders and purchase
materials, books of accounts etc., were not placed
before the Tribunal/Adjudicating Authority despite
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being called upon to do so. There is a specific finding to
that effect in the High Court‟s Order impugned herein.
4. In the circumstances, we set aside the order of the
High Court as well as that of the Tribunal, giving final
opportunity to the appellant herein to produce all the
relevant records particularly to show the nature of the
work which the appellant specifically undertakes.
Accordingly, the matter stands remitted to the
Tribunal which would examine whether the
appellant herein is undertaking the work of
conceptualising, visualising and creating the
advertisement or whether it is only complying
with the instructions of its clients. This aspect
needs further details. Therefore, we are setting aside
the order of the Tribunal as well as the order of the
High Court.
5. Subject to above, Civil Appeal stands disposed of.
Assessee will pay cost of Rs. 10,000/- (Rupees Ten
Thousand) to the Department as cost condition
precedent."
(emphasis supplied)
26. The Supreme Court, therefore, in the aforesaid judgment,
emphasised that there would be difference if a person is engaged in
proving any service connected with the making or preparation of the
advertisement and a case where a person merely complies with the
instruction of the clients for printing the contents supplied by the
client.
27. 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
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appellant has not challenged the findings of the adjudicating authority
on this aspect.
28. For the post 01.07.2012 period, the Commissioner has held that
the activity undertaken by the respondent being merely transfer of
title on goods by sale and subjected to Sales Tax/VAT on the full
value, would be excluded from the scope of service tax under section
65B (44)(a)(1) of the Finance Act.
29. The sale of the product has not been disputed and even
otherwise no grounds have been raised in the present appeal to assail
this part of the order of the Commissioner. There is also force in the
submission of learned counsel for the respondent that even the show
cause notice does not indicate why service tax would be leviable for
the period post 01.07.2012.
30. Thus, for all the reasons stated above, the order dated
18.07.2014 passed by the Commissioner does not call for any
interference in this appeal. The appeal is, accordingly, dismissed.
(Order pronounced on 14.09.2022)
(JUSTICE DILIP GUPTA)
PRESIDENT
(P. V. SUBBA RAO)
MEMBER (TECHNICAL)
JB
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CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
HYDERABAD
REGIONAL BENCH
SERVICE TAX APPEAL NO. 23542 OF 2014
Commissioner of Central Excise, ...Appellant
Hyderabad-III Commissionerate,
Hyderabad
versus
Macro Media Digital Imaging Pvt. Ltd. ...Respondent
147/D, Secto-I, Line-1, Phase-II,
Cherlapally IDA, Hyderabad- 500051
(Telangana State)
Appearance
Mr. V.R. Pavan Kumar, Authorized Representative of the Department
Mr. S. Thirumalai, Advocate for the Respondent
CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MR. C.J. MATHEW, MEMBER (TECHNICAL)
Date of Hearing: 04.05.2022
ORDER
(Order pronounced on 14.09.2022) (JUSTICE DILIP GUPTA) PRESIDENT (C.J. MATHEW) MEMBER (TECHNICAL) JB