By TIOL News Service

MUMBAI, MAR 07, 2017: THE appellant manufactures machinery for use in fertilizer industry. They placed an advertisement in a magazine "Fertilizer Focus" which is published in UK.

The department found this out from the financial accounts maintained by the appellant. One thing led to another and the officers took a view that for the consideration paid by the appellant for putting out the advertisement in the foreign magazine, they are liable to discharge Service Tax on reverse charge basis under the category of "Sale of space or time for advertisement".

A Service Tax demand for a princely sum of Rs.32,642/- was issued and the same was confirmed along with interest and penalties.

The matter reached the CESTAT and while granting stay the Bench recorded -

"5.1 The definition of 'newspaper' as defined under the Press and Registration of Books Act, 1867 is wide enough to cover any periodical work containing public news and comments on public news. In the instant case, the magazine is published once in two months and it is a printed periodical work. The magazine publishes news pertaining to fertilizer industry and advertisement of the said industry and contains articles on research work which is going on and the statutory provisions relating to the said industry. Since the scope of magazine is specific, it will be mainly of interest to public connected with that industry. Public connected with the industry would include a large number of the public such as fertilizer users, manufacture of fertilizers, farmers, scientists and all others whoever is interested in that field. They are as much part of the general public as anybody else and, therefore, we are prima facie of the view that the impugned magazine is a newspaper as defined in the law.

5.2 In any case, the transaction is revenue neutral,…"

We reported this order as - 2013-TIOL-748-CESTAT-MUM .

The appeal was heard and decided recently.

The CESTAT observed –

++ On reading the entire definition of "sale of space or time for advertisement" as defined in Section 65(105)(zzzm) of Finance Act, 1994, we find that the said definition excludes sale of space for advertisement in print media and sale of time slots by a broadcasting agency or organization.

++ Appellant had claimed that the advertisement put forth by them in the magazine 'Fertilizer Focus' was in print media, an argument disposed of summarily by the lower authorities, only on the ground that magazine 'Fertilizer Focus' will not be covered under the definition of "Newspaper" or "book".

++ We find that both the authorities have not considered the definition of the book as defined in sub-Section (i) of Section 1 of the Press and Registration of Books Act, 1867, which in our view will cover the magazine 'Fertilizer Focus' because the said definition of 'book' excludes business directories, yellow pages, and print catalogues meant for commercial purpose. This has been the claim of the appellant that the magazine 'Fertilizer Focus' published in UK was specifically for the use of the information of the fertilizer industry and the said magazine also included various articles of importance to the fertilizer industry world over.

++ In our considered view, the magazine 'Fertilizer Focus' will be covered under the definition of 'Book" and an advertisement placed by the appellant in the magazine being in print media is excluded from the service tax liability under the category of "sale of space or time for advertisement".

The impugned order was set aside and the appeal was allowed.

(See 2017-TIOL-717-CESTAT-MUM)