By TIOL News Service

MUMBAI, JULY 30, 2014: THE main activity of the appellant is to serve Mulay Group of Companies as agent for advertising in newspapers etc. by collecting the proforma of the advertisements through Mulay Group of Companies and forwarding the same to the desired newspaper for advertisement. If any person who wants to publish any advertisement in any of the newspapers directly goes to the newspaper, company does not give any discount. However, if the advertisement has been sent to the desired newspaper through commission agent the publishing newspaper company will give 10 to 15% discount in the form of commission. The appellants are only collecting and forwarding the advertisement to the desired newspaper and not performing anything concerning making, preparation, display or exhibition of advertisement. Hence the appellants are not providing any service which comes under the scope of advertising agency service.

But this submission of the appellant was not agreed to by the department and, therefore, service tax demands were confirmed against the appellant and upheld by the Commissioner(A).

Before the CESTAT, the appellant submitted that in the adjudication order as well as the order of the Commissioner (Appeals) there is no finding that the appellants are undertaking the activity in respect of making, preparation, display or exhibition etc. of advertisement. Hence the demand is not sustainable.

The Bench observed -

++ In the adjudication order dated 15.6.2011 there is a specific finding that the appellant was not engaged in making, preparation, display or exhibition of advertisement. The Commissioner (Appeals) in the impugned order also held that the appellants are engaged in collecting advertisement from Mulay Group of Companies and forwarding the same to the desired newspaper. Hence this activity shows that the appellants are engaged in the activity which is connected with the activity of advertisement published.

++ A reading of the definition of "advertising agency" shows that a person should be engaged in providing any service connected with the making, preparation, display or exhibition of advertisement. The admitted fact is that the appellants are not undertaking any activity connected with the making, preparation, display etc. and the appellants are only collecting the advertising and the same is forwarded to various newspapers for publication.

Holding that the appellants are not providing any activity which is covered under the category of advertising agency, the orders were set aside &the appeals are allowed.

(See 2014-TIOL-1367-CESTAT-MUM)