ST - Appellant undertakes ad campaign for Ministry of Tourism in print & electronic media & outdoor hoardings overseas - Media costs incurred beyond territorial waters of India is not includible in taxable value: CESTAT
By TIOL News Service
MUMBAI, SEPT 29, 2015: THE appellant is an advertising agency registered with the service tax 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 (under the category of "Advertising Agency Services") on the amount of rent and other expenses incurred on such hoardings.
The demand was confirmed by the CST, Mumbai along with interest and penalties.
Before the CESTAT, the appellant submitted 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.; that media costs on the sale of space was taxable from 01.05.2006 [under the category of "sale of space or time for advertisement"] and not prior to that. Furthermore, the media services which are provided by the appellant are outside India hence not liable service tax. It is his submission that the hoardings, bill boards and the conveyance on which advertisement campaign were undertaken abroad; he would rely on the Board's 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. Reliance is placed on the decision in Zee Telefilms Ltd. - 2006-TIOL-945-CESTAT-MUM, Prithvi Associates - 2005-TIOL-946-CESTAT-MUM, Foster Wheeler Energy Ltd. - 2007-TIOL-785-CESTAT-AHM & Cox and Kings - 2013-TIOL-1907-CESTAT-DEL in support.
The AR submitted that the entire activity of design and execution of the advertisement was in India for Ministry of Tourism, Govt. of India and the value which is to be included for discharge of service tax liability is the gross value.
The Bench considered the submissions and observed -
++ 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 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 Cox 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.
Holding that the ratio of the said judgement will be applicable to the case in hand, the order was set aside and the appeal was allowed.
(See 2015-TIOL-2057-CESTAT-MUM)
