Punjab Advertising Co. Vs Commissioner of Central Excise & Service Tax (CESTAT Chandigarh)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh, decided a batch of six appeals involving the valuation of taxable advertising agency services provided through wall paintings and hoardings. The appellant was engaged in providing advertising services to various companies by painting advertisements on rented walls and displaying printed flexes on hoardings. During an audit, the department found that the appellant had excluded wall rent and the cost of printed flexes from the taxable value while discharging service tax liability. Show cause notices were issued for multiple periods and the demands were confirmed by the lower authorities.
The Tribunal identified three issues: whether wall rent should be included in the taxable value of advertising services, whether the value of printed flexes supplied through another entity should be included in the taxable value, and whether the extended period of limitation was correctly invoked.
On the issue of wall rent, the appellant argued that the rent paid to wall owners was merely reimbursable expenditure and that it acted as a pure agent of its clients. The Tribunal rejected these contentions. It observed that the appellant rented walls, used them to provide advertising services, and recovered the amounts from clients through debit notes.
