No service tax on printing of advertisement content on PVC Material as it amounted to ‘Manufacture’

Commissioner of Central Excise Vs Macro Media Digital Imaging Pvt. Ltd.  (CESTAT Hyderabad)

Conclusion:  There would be difference if a person was engaged in proving any service connected with the making or preparation of the advertisement and a case where a person merely complied with the instruction of the clients for printing the contents supplied by the client thus, the activity of printing of advertisement content on PVC materials amounted to “manufacture”, and therefore, service tax was not leviable.

Held: The issue that arose for consideration was 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 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 contended that it had no authority from the customers to make any changes in the advertisement content provided by customers and the scope of the activity was limited to printing the contents provided by the customers on the PVC material. Thus, according to the respondent, it had 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. It was held that the Supreme Court in Zodiac Advertisers vs. Commissioner of C. Ex. & Cus., Cochin⁴ emphasised that there would be difference if a person was engaged in proving any service connected with the making or preparation of the advertisement and a case where a person merely complied with the instruction of the clients for printing the contents supplied by the client. In so far as levy of service tax on printing activity was 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 resulted into printed PVC flex or PVC board would amount to manufacture and, therefore, would not be leviable to service tax. Secondly, the appellant had not challenged the findings of the adjudicating authority on this aspect. For the post 01.07.2012 period, the Commissioner had 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. The sale of the product had not been disputed and even otherwise no grounds had been raised in the present appeal to assail this part of the order of the Commissioner.

FULL TEXT OF THE CESTAT HYDERABAD ORDER

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.

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