Case Law Details
After specific category is introduced as a taxable service in the statute from a specified date, the said activity cannot be a taxable entity or technical entry in any other services prior to that date.
CASE LAWS DETAILS
DECIDED BY: CESTAT, SOUTH ZONAL BENCH, BANGALORE, IN THE CASE OF: Margadarsi Marketing Pvt. Ltd. Vs. CCE, APPEAL NO: Appeal No. ST/346/2008, DECIDED ON April 5, 2010
FACTS
The relevant facts that arise for consideration are that the appellants filed a refund claim on 22-3-2006 claiming a refund of Rs. 2,68,41,849/ being the service tax paid on commission received for news paper sales promotion service and space selling service provided during the period from 9-7-2004 to 28-2-2005. The appellants paid this tax as provider of Business Auxiliary Service (BAS) under section 65(19) of Finance Act, 1994 (hereinafter referred to as the “Act”). The claim was returned to the appellants in view of the classification of the services under BAS by the Commissioner from 1-7-2003 in the Order-in-Original No. 3/2006 Adj. ST dated 16-3-2006. On appeal against this, the Commissioner (Appeals) remanded the case to the original authority to pass an order after adhering to principles of natural justice. The refund claim consequently was resumbmitted on 29-8-2007. A notice asking them to show cause why the claim should not rejected was issued on 12-9-2007. The Assistant Commissioner of Service Tax passed an order No. 11/2007-ST-R dated 26/27-11-2007 rejecting the claim. Aggrieved by such an order passed by the Adjudicating Authority, appellants preferred an appeal to the learned Commissioner (Appeals). Learned Commissioner (Appeals) after granting an opportunity of personal hearing and considering the submissions made during personal hearing and rival submissions during hearing, did not accept the contentions raised by the appellant in their appeal and reject the appeal filed by the appellant and upheld the Order-in-Original. Hence, this appeal.
HELD
7.1, It can be seen from the above reproduced paragraphs that the learned Commissioner (Appeals) has not considered the issue in its proper perspective. It is a matter of fact that the sale of space per se has been considered as an activity or service by the parliament from 1.5.2006 by insertion of the clause (zzzm) and under sub-section 105 of Section 65 of the Finance Act, 1994. The said Section 65 (105) (zzzm) reads as under:
“to any person, by any other person, in relation to sale of space or time for advertisement, in any manner; but does not include sale of space for advertisement in print media and sale of time slots by a broadcasting agency or organization.
Explanation 1. – for the purposes of this sub-clause, “sale of space or time for advertisement” includes,-
Providing space or time, as the case may be, for display, advertising, showcasing of any product or service in video programmes, television programmes or motion pictures or music albums, or on billboards, public places, buildings, conveyances, cell phones, automated teller machines, internet;
Selling of time slots on radio or television by a person, other than a broadcasting agency or organization; and Aerial advertising
Explanation 2. – For the purposes of this sub-clause, “print media” means “book” and “newspaper” as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867 (25 of 1867).” “]
7.2. On plain reading of the above section, it is very clear that any services provided by any person to any other person in relation to sale of space would be taxable from 1.5.2006. It is undisputed in the case before us that the appellant has been selling the space or providing the services in relation to the sale of space to M/s. UEL during the period 09.07.2004 to 28.02.2006. Since the activity of services in relation to sale of space has come into the statute from 1.5.2006, we find that the said activity cannot be taxed by the authorities prior to that date. It flows that the service tax liability discharged by the appellant is not a tax which has been collected by the lower authorities in accordance with law. We find that the proposition put forth by the learned Counsel that after specific category is introduced as a taxable service in the statute from a specified date, the said activity could not have been a taxable entity or technical entry in any other services prior to that date is correct. |This issue is squarely settled by the following decision of the Tribunal:
(iv) BCCI Vs. CST, Mumbai2007 (7) STR 384 (Tri.-Mum.)
(v) Geo Foundations & Structures (P) Ltd. Vs. CCE & C, Cochin -2009 (15) STR 408 (Tri.-Bang.)
(vi) Thriveni Earth movers Pvt. Ltd. Vs. CCE, Salem – 2009 (15) STR 393 (Tribunal.-Che.)
RELEVANT EXTRACTS:
7. We first take up the issue regarding space selling. It is undisputed that the appellant herein is soliciting clients for sale of space in the newspaper. The impugned order has rejected the contentions of the appellant by recording the following findings:
“In relation to the promotion of sale of space in the newspapers, it is required to be noted that the original authority had observed that there is no hostility between Sec. 65(105) (zzzm) and Sec. 65(19). He said that promotion of sale of space is not the same thing as sale of space per se. A perusal of the definition of Sec. 65(105) (zzzm) does not suggest anything to the contrary. The expression “in relation to” was not prefixed to that part of the definition which excluded sale of space in “print media” but was only used before the description of the service. The result is that while the taxing part was expanded, the exclusion part is restricted. Therefore, the first argument is not acceptable. There is no need to apply the principle of harmonious construction when there is no discord between Sec. 65(105)(zzzm) and Sec. 65(19).
Secondly, it is argued that since neither they were promoting or marketing any goods produced, provided or belonging to their client viz., UEL or any service provided by UEL [(as they (UEL) were not providing any service] no incidental or auxiliary service or provision of service on behalf of the client could have been rendered attracting provisions of Section 65(19) (iv)/65 (19) (vii). It was also stated that while the notice proposes classification under certain sub-section, it was classified under another subsection. I have to say that the notice only observes that the services appears to fall under Section 65(19) (iv)/65 (19) (vii). The original authority made no observations on the various sub-sections and classification (nor was he required to), except to state that appellants had correctly classified the goods under BAS meriting rejection of refund. There is no doubt in my mind however, that sale of space in print media is a service though may not be a taxable service. The fact that sale of space in print media was specifically excluded from the definition of taxable service in Sec. 65 (105) (zzzm) itself is a proof that, it is a service. The fact that sale of space in print media was specifically excluded from the definition of taxable service in Sec. 65 (105) (zzzm) itself is a proof that it is a service. It is not mentioned in Section 65(19)(ii)/Section 65(19) (vi) that the service provided by their client has to be a taxable service to tax them for the promotion or marketing of that service.”
7.1 It can be seen from the above reproduced paragraphs that the learned Commissioner (Appeals) has not considered the issue in its proper perspective. It is a matter of fact that the sale of space per se has been considered as an activity or service by the parliament from 1.5.2006 by insertion of the clause (zzzm) and under sub-section 105 of Section 65 of the Finance Act, 1994. The said Section 65 (105) (zzzm) reads as under:
“to any person, by any other person, in relation to sale of space or time for advertisement, in any manner; but does not include sale of space for advertisement in print media and sale of time slots by a broadcasting agency or organization.
Explanation 1. – for the purposes of this sub-clause, “sale of space or time for advertisement” includes,-
Providing space or time, as the case may be, for display, advertising, showcasing of any product or service in video programmes, television programmes or motion pictures or music albums, or on billboards, public places, buildings, conveyances, cell phones, automated teller machines, internet;
Selling of time slots on radio or television by a person, other than a broadcasting agency or organization; and Aerial advertising
Explanation 2. – For the purposes of this sub-clause, “print media” means “book” and “newspaper” as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867 (25 of 1867).” “]
7.2. On plain reading of the above section, it is very clear that any services provided by any person to any other person in relation to sale of space would be taxable from 1.5.2006 it is undisputed in the case before us that the appellant has been selling the space or providing the services in relation to the sale of space to M/s. UEL during the period 09.07.2004 to 28.02.2006. Since the activity of services in relation to sale of space has come into the statute from 1.5.2006, we find that the said activity cannot be taxed by the authorities prior to that date. It flows that the service tax liability discharged by the appellant is not a tax which has been collected by the lower authorities in accordance with law. We find that the proposition put forth by the learned Counsel that after specific category is introduced as a taxable service in the statute from a specified date, the said activity could not have been a taxable entity or technical entry in any other services prior to that date is correct. |This issue is squarely settled by the following decision of the Tribunal:
(iv) BCCI Vs. CST, Mumbai2007 (7) STR 384 (Tri.-Mum.)
(v) Geo Foundations & Structures (P) Ltd. Vs. CCE & C, Cochin -2009 (15) STR 408 (Tri.-Bang.)
(vi) Thriveni Earth movers Pvt. Ltd. Vs. CCE, Salem – 2009 (15) STR 393 (Tribunal.-Che.)
7.3 In view of the above findings, we hold that the appellant is not liable to pay any Service Tax on the category of Space Selling for the selling of space levied under the category of BAS for the period 9-7-2004 to 28-2-2006 and amount paid by the appellant is liable to be refunded, subject to the passing of the hurdle of unjust enrichment. In order to come to a conclusion, that there is no of unjust enrichment, for this limited purpose and also quantifying the amount i.e. to be refunded to the appellant, we remand the matter back to the Adjudicating Authority, who will follow the principles of natural justice, before deciding the issue.
