M/S Grey Worldwide (India) Pvt. Ltd vs Commissioner Of Service Tax

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI

COURT No. I

Appeal No. ST/642/10

(Arising out of Order-in-Original No. 24/STC-I/BR/10-11 dated 19.08.2010 passed by Commissioner of Service Tax, Mumbai I)

For approval and signature:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

M/s Grey Worldwide (India) Pvt. Ltd. Appellant Vs.

Commissioner of Service Tax, Mumbai Respondent

Appearance:

Shri A.R. Krishnan, C.A. for appellant Shri A.K. Goswami, Addl. Commr (AR) for respondent

CORAM:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical)

Date of Hearing:20.08.2015 Date of Decision: 20.08.2015

ORDER NO

Per: M.V. Ravindran

This appeal is directed against Order-in-Original No. 24/STC-I/BR/10-11 dated 19.08.2010.

2. The relevant facts that arise for consideration are the appellant is an advertising agency registered with the department. They had undertaken an advertisement campaign for Ministry of Tourism, Govt. of India for campaign India as tourist destination in print and electronic media and outdoor hoardings in London, New York and Paris and also discharged the service tax liability on the amount of agency commission received from Govt. of India. It is the case of the Revenue that the appellant is required to discharge service tax liability on the amount of rent and other expenses incurred on such hoardings and would get covered under the category of Advertising Agency Services. The appellant has contested the show cause notice on merits as well as on limitation. Adjudicating authority after following due process of law, did not agree with the contention raised and confirmed the demands with interest and impose penalty under Section 76 and 77 of the Finance Act, 1994.

3. Learned C.A. after taking us through the records would submit that the amount recovered by the appellant as media costs from the Ministry of Tourism is not in relation to the advertisements but the expenses for putting up the hoardings, sale of space etc. He would submit that media costs on the sale of space was taxable from 01.05.2006 and not prior to that. He would submit that the activity undertaken by them are for display of outdoor hoardings on advertisement and bill board and conveyance vehicles abroad and it would be covered more specifically for tax from 01.05.2006 under the category of sale of space or time for advertisement. He would submit that this view has been taken by the Bench in the case of Zee Telefilms Ltd. Vs. CCE - 2006 (4) STR 349 (Tri. Mum) and Indian National Shipowners Association v. UOI - 2009 (14) STR 289.

3.1 It is his next submission that the media services which are provided by the appellant are outside India (beyond territorial waters of India) hence not liable service tax. It is his submission that the hoardings, bill boards and the conveyance on which advertisement campaign were undertaken at abroad; he would relying upon the Boards Circular No. 36/4/2001/-ST dated 08.10.2001 for the proposition that amounts charged by advertisement agency for sale of space or time for advertisement in print media and electronic media is not includable in the value of taxable service. It is his submission that the same view has been decided by the Tribunal in the case of Prithvi Associates vs. CCE - 2006 (1) STR 32 (Tri  Mum) and followed in the case of Foster Wheeler Energy Ltd. V. CCE - 2007 (7) STR 443 (Tri.  Ahmd). He would submit that identical issue as to the tours and travels undertaken by Cox and Kings was considered by the Bench and held that the operation of tours which was conducted abroad is not taxable. It is his submission that this case law is reported in 2014 (35) STR 817 (Tri  Del).

3.2 On limitation it is his submission that the Ministry of Tourism refused them to pay service tax on media costs on the ground that such services are not taxable as the contract is with the Govt. of India.

4. Learned D.R. on the other hand would submit that the entire activity of design and execution of the advertisement was in India for Ministry of Tourism, Govt. of India. It is his submission that the service provider and recipient of service are in India and has been correctly charged, as the value which is to be included for discharge of service tax liability is the gross value. He would submit that the advertisements on bill board, hoardings and conveyances (media vehicles and buses) even if they are in abroad, service tax liability arises. It is also his submission that the appellant having not declared the correct value, hence invoking of extended period is right.

5. We have considered the submissions made by both side and perused the records.

6. There is no dispute as to the fact that the appellant is covered under the category of advertising agency services and discharge the service tax liability on the agency commission received by them. The only dispute is regarding the value that needs to be added for discharging service tax liability. The Revenues case is that the amount received by the appellant from the Ministry of Tourism, Govt. of India, towards the media costs is required to considered as gross value for services rendered by the appellant hence the said amount needs to be included into the gross value of the services rendered. First and foremost, we find that the adjudicating authority has incorrectly appreciated the fact that the service tax liability sought to be recovered from the appellant is in respect of outdoor campaign. It was not in dispute that the hoardings/bill boards and media costs and the advertisement published in print and electronic media were abroad i.e. London, New York and Paris. If that be so, the advertisement campaign has to be looked into as to who is the service recipient and service provider. In the case in hand it is not in dispute is that the media costs were incurred by the appellant beyond the territorial waters of India and the ratio of judgement of Cox and Kings (supra) would be directly applicable. We find that this decision of this Tribunal in the case of Cos and Kings (supra) was considering the issue wherein the appellant therein was conducting international tours, revenue authorities wanted to tax entire amounts/considerations received under the service tax liability, Tribunal held that for the services rendered by the appellant beyond the territorial waters of India, service tax would not be charged even if the tour emanates from India and ended in India and even if tourists being Indians. We reproduce the ratio of the judgement:-

(m) On the aforesaid analysis we conclude that the consideration received for operating and arranging outbound tours, even if falling within the scope of the amended definition of tour operator; (provided by the asseessees and consumed by their tourist customers beyond Indian territory), is not liable to levy and collection of service tax, under provisions of the Act. We hold that provisions of the Act do not have an extra territorial operation. The conclusion and analysis on this issue (issue No. (b) is without prejudice to our analysis and conclusion on issue No. (a), that since the assesses had provided a composite service, of operating outbound tours apart from engaging in the business of planning, scheduling, organizing of arranging such tours; and by a mode of transport other than in a tourist vehicle, the service falls outside the definition locus of tour operator.

6.1 The ratio of the said judgement will be applicable in the case in hand as the facts in hand not at all in dispute that the media costs incurred by the appellant were in respect of bill boards, hoardings and conveyance abroad. Accordingly, on this point we hold that the appeal needs to be accepted and we do so.

6.2 The appeal filed by the appellant is allowed and impugned order is set aside. As regards various other points raised by both sides, we find that since we have allowed the appeal on merits of the case, we are not recording any findings on other points.

7. Impugned order is set aside and the appeal is allowed. (Dictated in Court)

(C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial)

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7 Appeal No. ST/642/10