ST - listing fee charged towards banner advertising - SCN alleges activity would be exigible to tax under online data access - demand dropped - in appeal memo, Revenue seeks classification under BAS but has no merits: CESTAT
By TIOL News Service
MUMBAI, FEB 17, 2014: THIS is a Revenue appeal.
The respondent assessee is engaged in providing e-commerce transaction services through website which facilitates sale and purchase of goods over internet and they were charging a commission from sellers for successful e-commerce transactions. In addition, they were also charging a “listing fee” towards “banner advertising” on the web site wherein the advertisements were flashed on the web site without any creative work involved.
Because of the e-commerce transaction services offered, the Revenue viewed that the activity would be exigible to service tax under the category of ‘online data access and/or retrieval service' as defined in Section 65(105)(zh) of the Finance Act, 1994 and accordingly, a show-cause notice dated 27/01/2005 was issued to the appellant demanding service tax of Rs.80,85,217/- for the period July 2001 to August 2004.
The Commissioner of Service Tax, Mumbai held that the services undertaken by the appellant are classifiable under Business Auxiliary Services (BAS) and they have to discharge service tax under the said category with effect from 01.07.2003 on the commission received by them. [How the change?]
In the matter of “listing fees”, the adjudicating authority held that they cannot be classified as BAS and would be more appropriately covered under “sale of advertising space and time service” which came under the tax net with effect from 01/07/2006. Accordingly, he dropped the demand on the consideration received under the category of listing fees.
Aggrieved of the same, the Revenue is before the CESTAT.
In the appeal memorandum filed by the Revenue it is urged that the listing fees charged by the appellant would come under the category of BAS for the period prior to 01/05/2006 and with effect from 01/05/2006, the same shall be covered under “sale of advertising space and time service” and accordingly, the adjudicating authority should have confirmed the service tax demanded on listing/banner charges.
The Revenue representative reiterated the grounds urged in the appeal memorandum.
The Bench observed that the respondent had sought adjournment but since the case had come up for hearing for the fifth time it was not inclined to accede to the request.
In the matter of the Revenue appeal, the Bench observed -
+ As per the appeal memorandum, service is classifiable under “sale of advertising space and time”. However, the appeal memorandum seeks to classify the said services under BAS prior to 01/05/2006. This contention of the Revenue is contradictory. If the service is classifiable under “sale of advertising space and time” with effect from 01/05/2006 which is a totally different service and which has not been carved out of BAS, the Revenue cannot contend that the same should be classified under BAS prior to 01/05/2006.
+ It is a settled position of law that when the new entry is created so as to bring the activity under the category of taxable service, it is implied that the said activity was not taxable prior to inception of the new entry. Therefore, we do not find any merit in the Revenue's appeal.
+ We also observe that in the show-cause notice issued to the noticee the classification of the activity under BAS has not been raised at all.
Holding that there is no merit in the Revenue appeal, the same was dismissed.
In passing: Now, for the appeal by the assessee!
(See 2014-TIOL-243-CESTAT-MUM)
