M/S Bhagwati Enterprises vs Cce, Jalandhar

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 26 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

Service Tax Appeal No. 269 of 2009

(Arising out of order in appeal No. 16/ST/APPL/Jal/2009 dated 17.02.2009 passed by the Commissioner (Appeals), Customs & Central Excise, Chandigarh).

M/s Bhagwati Enterprises Appellant

Vs.

CCE, Jalandhar Respondent

Appearance:

Shri Sudhir Malhotra, Advocate for the appellant

Shri Mani Ram Sharma, DR for the Respondent

Coram: Honble Mr. Justice G. Raghuram, President

Honble Mr. R. K. Singh, Member (Technical)

Final Order No. 51390/ 2015

Per: R. K. Singh:

Appeal has been filed against order in appeal No. 16/ST/APPL/Jal/2009 dated 17.02.2009 passed by the Commissioner (Appeals), Customs & Central Excise, Chandigarh which upheld the Order-in-original dated 25.11.2008 in terms of which service tax demand of Rs. 3,58,546/- was confirmed alongwith interest and penalties on the ground that the appellants were providing advertising agency service on which they did not pay service tax during the period 2006-07.

2. The appellants have contended that they were not providing any advertising agency service and were in fact renting space from Railways which they used to further give on rent. They were not providing any design or material etc. and therefore were not covered under the advertising agency service. They stated that the service rendered by them would be covered under renting of immovable property service which were not taxable during the period 2006-07.

3. We have considered the contentions of the appellants. In Section 65(3) of Finance Act, 1994, advertising agency is defined as under:

Advertising agency means any person engaged in providing any service connected with the making, preparation, display or exhibition of advertisement and includes an advertising consultant.

The appellants have essentially stated that they were taking space from Railways on rent and giving the same on rent to various persons but they were not engaged in providing any service connected with making, preparation display or exhibition of advertisement. It is seen that in the case of CCE vs. Azad Publication  2004 (167) ELT 59 (Tri. Del.) it was held that permitting display of advertisement on its site and raising bill for realising rental charges was not covered under advertising agency service. Similarly, in the case of CCE vs. The Incoda  2004 (174) ELT 65 (Tri. Kol, it was held that respondent hired space in Metro Railway coaches and inter-alia provided space to its client for advertising and such activity was not tantamount to an act of advertising agency. Thus renting of space without providing any service connected with making, preparation, display or exhibition of advertisement would not be covered under advertising agency service.

4. We have perused the impugned order-in-appeal. We find that the Commissioner (Appeals) has observed as under:

5.2. It is however observed that now the appellant while filing appeal against the impugned order has changed/ twisted their ground for non payment of service tax that they were getting space from Railways and let out the said space to different clients for displaying their advertisement for specific period for which they were getting rent from their customers and letting of space does not fall under the category of Advertising Agency services and accordingly not chargeable to service tax whereas during the investigation stage or adjudication stage, the appellant has not submitted these facts, despite being asked for twice. Thus it is observed that in the grounds of appeal, they had raised additional evidence which is not allowed in terms of the provisions of Rule 5 of Central Excise (Appeals) Rules, 2001.

Having thus observed the Commissioner (Appeals) referred to Rule 5 of the Central Excise (Appeals) Rules, 2001 and held that additional evidence can be considered only when the adjudicating authority has refused to admit evidence which ought to have been admitted or the appellant was prevented by sufficient cause from producing the evidence which he was called to produce by the adjudicating authority or where the appellant was prevented before the adjudicating authority in evidence which is relevant to any ground of appeal etc. Accordingly the Commissioner (Appeals) refused to admit evidence relating to the contention of the appellant that they were only renting out the space which they themselves rented from the Railways and were not providing any advertising agency service.

5. We have given due consideration to the appellants contention and we are of the view that in the interest of justice additional evidence in support of the appellants aforesaid contention should be admitted. Accordingly, we set aside the impugned order-in-appeal and remand the case to Commissioner (Appeals) with the direction that the additional evidence in support of the contention that the appellants were only renting out the space and not providing any advertising agency service should be admitted and the case readjudicated after giving opportunity of hearing to the appellants. Needless to say that in view of the discussion earlier, if the Commissioner (Appeals) is satisfied with the correctness of the contention of the appellants on the basis of the evidence produced that they only rented out space and collected rental charges and did not engage in providing any service connected with making preparation, display or exhibition of advertisement then the service rendered would not fall within the category of advertising agency service in which case the demand would not be sustainable.

(Justice G. Raghuram)

President

(R. K. Singh)

Member (Technical)

Pant

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