Customs, Excise and Gold Tribunal - Tamil Nadu
Market Chase Advertising vs Commissioner Of Central Excise on 13 February, 2008
Equivalent citations: [2008]13STJ324(CESTAT-CHENNAI), 2008[10]S.T.R.598
ORDER P.G. Chacko, Member (J)
1. The lower authorities have demanded service tax of Rs. 3,85,373/- from the appellants for the period 01.04.1998 to 02.12.2002, treating them as "advertising agency" as defined under Section 65(3) of the Finance Act, 1994. They have also imposed penalties on the party under various provisions of the said Act. The activities in respect of which service tax was demanded from the appellants include preparation and erection of banners, traffic sign boards, centre median grills and barricades as required by traffic police. A part of the demand of service tax relates to fabrication and erection of hoardings for the display of advertisements of their private clients. In respect of the preparation and erection of banners, sign boards etc., for the traffic police, the appellants had billed the sponsors (owners of shops/business establishments in the neighbourhood of the sites of the said structures) and collected charges for the cost of material including painting as also the cost of labour. In some cases, cost of re-painting and maintenance was also collected from the sponsors. In respect of the hoardings, the appellants collected rental from their clients whose advertisements were displayed. The impugned demand of service tax is on the gross amount so collected by the appellants. These facts are not in dispute. However, the case of the Revenue as made out in the impugned order is that the activity undertaken by the appellants included preparation of advertisements and, therefore, the activity amounted to a 'taxable service' under Section 105(e) of the Finance Act. According to this provision, any service provided to a client by an advertising agency in relation to advertisement in any manner is a taxable service. The definition of "advertising agency", under Section 65(3) of the Act reads as below:
Advertising agency means any commercial concern engaged in the providing of any service connected with the making, preparation, display or exhibition of advertisement and includes an advertising consultant.
2. After hearing both sides and considering their submissions, I note that the case of the appellants is that, as they did not design, visualise or conceptualise any advertisement to be displayed/exhibited on the banners, traffic sign board, traffic barricade or hoarding, they cannot be said to have made or prepared any advertisement and, therefore, they did not fall within the scope of the definition of "advertising agency". In support of this case, learned Counsel has relied on the following decisions:
(i) Commissioner of Central Excise, Chennai v. Team UPD Ltd. 2005 (179) E.L.T. 469 (Tri-Chennai).
(ii) Rex Advertisers v. Commissioner of Service Tax, Bangalore 2006 (2) S.T.R. 330 (Tri-Bang.).
(iii) Zodiac Advertisers v. Commissioner of Central Excise, Cochin 2006 (3) S.T.R. 538 (Tri.Bang.).
Counsel has also referred to Trade Notice No. 345/4/97-TRU dated 16.08.1999 of the Commissioner of Central Excise, Kolkata. Learned SDR has heavily relied on the statement given by the proprietor of 'Market Chase Advertising' on 18.12.2002 under Section 14 of the Central Excise Act, wherein he had stated inter alia that he was engaged in preparation of traffic grills, traffic signals, bus shelters, traffic umbrellas, hoardings and traffic signages containing advertisements and that he had collected advertising and preparation charges. He also stated that, in some cases, he had realised service tax also from clients. He also assured the department that the service tax so collected would be paid to the Government shortly. It is further submitted by learned SDR that, on the facts stated by the proprietor in his statement, the case law cited by learned Counsel cannot be relied upon. In his rejoinder, it is submitted by counsel that, after a clear understanding of the relevant provisions of law, the facts of the case were correctly stated by the appellants in their reply to the show-cause notice. It is submitted that any adverse averment contained in their statement given to departmental investigators was only based on misunderstanding. It is claimed that the appellants never intended to mean that they had prepared advertisements. What they had meant was preparation of traffic grills etc., for displaying traffic signs/advertisements.
3. After considering the submissions of both sides, the appellants seem to have made out a firm case against the impugned demand of service tax. The case law cited by learned Counsel is to the effect that, for a person to be recognised as "advertising agency" as defined under Section 65(3) of the Finance Act, he should be shown to have made or prepared advertisements. The trade notice cited by counsel clarified that, in the making or preparation of advertisements, there must be conceptualisation, visualization and designing of advertisements. This trade notice was noted by the Tribunal in the said cases and it was held that, unless these aspects of an advertisement were shown to exist, it cannot be said that any advertisement was made or prepared. In this view of the matter, the appellants cannot be held to have satisfied the requirements of 'advertising agency' defined under the Act. As learned SDR has not questioned the finality of the decisions cited by the counsel, I have got to follow those decisions.
4. The exploration given by the appellants with regard to the statement of the proprietor seems to be cogent inasmuch as the facts stated by them in their reply to the show-cause notice are apparently supported by the documentary evidence available on record, consisting of the specimen bills raised on their clients during the period of dispute.
5. In the result, the impugned order is set aside and this appeal is allowed.
(Dictated and pronounced in open court)