ORDER
C.N.B. Nair, Member (T)
1. The appellant is engaged in the making of Hoardings, Sign Boards and signages. He got a contract from Uttaranchal Tourism for preparation and fixation of signages in Kumaon Region of Uttaranchal State in March, 2001. The design of signages, their colour schemes etc. were provided by the State tourism authority. The tender described the work as under:
No. 2424/2-10-18/99
From,
Director Tourism,
Uttaranchul, Dehradun.
To, Ajanta Fabricators , Ajanta House, Ganga Vihar, Haridwar Road, Rishikesh. D. Dun: Dated 31 March, 2001 Sub: Preparation and fixing of signages in Kumaon Region. Sir,
Please refer to your tender No-AF/DT-99/1, dated 30-07-99 and further letter no-Nil dated 23-03-2001 on the above subject.
We are pleased to place order to your unit for the preparation and fixing of signage in Kumaon Region as per the following specifications and rates:
Sl. No. Details
of Works
Qty.
Rates
Total Amount
1-Board made of MS angle Iron frame of 40x40x5 mm
size, fixed with MS sheet of 22 gauge, two cross flate
of 40xs5 mm two leg poles of size 50x50x6 mm of 1.75 mts.
height above ground level exclusive of board size and ground deep below
ground at 0.45 mts., with CC in the ratio of 1:4:6
Board painted with high quality stoving enamel
paint by spray process, writing drawing of the given matters by department as
per colour choice for prominent display, important information
shall be laminated with Engineers grade refractive sheets.
(i)-0.90Mx0.60M
87
1625/-
1,4 1,375/-
(ii)1.20Mx0.90M
79
367 5/-
2.90.325/-
(iii)-1.80M.\1.20M
30
4560/-
1,36,800/-
2-Samc as above but made of wooden frame of
seasoned sal wood, 60x40mm, fixed with 26 gauge MS
sheet, two cross dates of size 50x50x6mm and two angle stakes of same size
for support and two or three channel leg poles of size 100x50mm of 1 .75 mts. height above ground level, exclusive of board size,
grouted deep below ground at 0.60 mts, with CC in
the ratio of 1:4:6 gloss synthetic enamel paint & important matter shall
be laminated in Engineer grade Refractive sheets.
(i)-2.79Mx 1.80M
14
7250/-
1,01,500/-
(ii)-3.60Mx 2.40M
20
11500/-
2,30,000/-
Total
9,00,000/-
Please collect the details of the materials to be written on the signages, colour schemes to be used and the list of the places where these signages are required to be fixed from this office on any working day at the earliest.
You are also required to deposit earnest money of Rs. 18, 000/- (Eighteen Thousand) in the form of a draft/TDR drawn in favour of the Director Tourism, Uttaranchal before executing this order.
You are requested to prepare and fix these signages on top priority and submit the bill in duplicate in favour of Director Tourism, Uttaranchal.
Thanking you,
Yours faithfully,
(A.K. Dwivedi)
Deputy Director Tourism,
For Director Tourism, Uttaranchal,
Patelnagar, Dehradun.
2. Service Tax Authorities took the view that the services provided by the appellant was in the category of advertising service and was liable to service tax accordingly. Therefore, a show cause notice dated 17/02/04 was issued demanding service tax of about Rs. 44,000/- (Rupees Forty Four Thousand only) and proposing to impose, penalties for nonpayment of the tax on time. The appellant resisted the proposal by contending that the it was not an advertising agency nor was the service rendered by it in the nature of advertisement. It was contended that appellant was merely a painter/writer of signage boards and such work fall appropriately in the category of manufacture. These contentions failed and the case was decided against the appellant in adjudication and in appeal before Commissioner (Appeals) made one. The present appeal before us is directed against those orders.
3. The finding in the order is that Section 65 of the Finance Act 1994 has defined “advertising agency” as “any commercial concern engaged in providing any service connected with the making, preparation, display or exhibition of advertisement” and that the preparation and installation of signages by the appellant are within the definition of taxable service. The orders have rejected the appellant’s contention that its service is not advertising service as explained in Board’s circular No. 341-43/96-TRU dated 13/01/96 and as held in this Tribunal’s decision in the case of Star Neon Sign. v. CCE, Chandigarh 2002 (141) ELT 770 (Tri – Del)
4. The submission of the learned consultant of the appellant is that Board’s circular has clarified that the service of an advertising agency is in the nature of designing, visualizing, conceptualizing etc. of advertisements, in contradistinction to the physical activity of painting and writing advertising materials or erecting hoardings. It is being pointed out that to the same effect is the decision of the Tribunal in the case of Star Neo Sign case. The learned consultant has also relied on the decision of this Tribunal in the case of Zee Tele Films Ltd. and Star India (P) Ltd. (2006) TIOL – 945 – CESTAT Mumbai, in support of the contention that the Tribunal has accepted the plea that it is the creative aspect of advertising which is liable to tax and that the expanded statutory definition did not bring entirely alien activities within the scope of the levy as advertising.
5. Learned SDR would contend that the definition is wide and comprehensive as to cover direct and indirect services connected to advertising and for that reason the appellant’s activities are within the scope of the definition. The learned SDR has also relied on the judgments of the Hon’ble Supreme Court in the case of Doy Pack Systems (P) Ltd. v. Union of India as reported at , the case of State of Uttar Pradesh v. Union of India as reported at and the case of Akbar Badruddin Jiwani v. Collector of Customs as reported at in the support of his contention.
6. We have considered the submissions made by both sides and perused record.
7. The taxable service is advertising service and according to Section 65(90)(e), advertising service means
services to a client, by an advertising agency, in relation to advertisement, in any manner.
Further, according to Section 65(1), advertising agency means:
any commercial concern engaged in providing any service connected with the making, preparation, display or exhibition of advertisement and includes an advertising consultant.
8. The appellant’s contention is that it is a mere manufacturer/maker of signage boards. It does not undertake designing, visualizing or any of the activities carried out by an advertising agency. Instead, it does the physical part of painting, writing, manufacturing etc. It is the appellant’s contention that the physical preparation and re-production of advertisement material remains excluded from the levy in terms of board circular dated 16/08/99. The portion relied on may be read:
In case of persons who are printing and publishing telephone directories, yellow pages or business directories, their activity is essentially of printing a readymade advertisement from the advertisers and publishing the same in the directory. Their activity is similar to those carried out by news papers or periodicals, as such this activity shall not attract service tax. However, if these persons also undertake any activity relating to making or preparation of an advertisement, such as designing, visualizing, conceptualizing etc., then they will be liable to pay service tax on charges made thereon.
The submissions is that the above clarification leaves no room for doubt that ‘making or preparation of advertisement’ means activities like designing, visualizing, conceptualizing etc. and not the physical activity (manual labour) of painting or writing of the advertising material.
9. When an almost identical issue came before this Tribunal in the case of Star Neon Sign, the Bench the Tribunal held as under:
We find that the term ‘advertising agency’ is defined in the Act and as per the definition the advertising agency is to mean any commercial concern engaged in providing any service connecting with the making, preparation, display or exhibition of advertising and includes advertising consultant. The appellants are only manufacturing the sign boards as per the requirements of their customers. Such an activity cannot be held to be advertising agency as the appellants are not rendering any advertising service. The person like the appellants cannot be called as advertising agency as they are only writing or preparing the sign boards at the behest of their customers. There is no evidence on record to show the relationship between the customers and the appellant is of advertising agency which is necessary for imposition of service tax.
10. The Tribunal also had occasion to consider the effect of the extended definition in the case of Zee Tele Films Ltd. And Star India (P) Ltd. The Tribunal held that the extended definition did not bring activities unconnected to those of an advertising agency within the scope of the levy. After discussing much case law on the effect of an extended definition, the Tribunal held that an extended definition did not supplant or contradict the plain meaning of the entry in the statute.
11. It is clear from the record that the appellant is not equipped for functioning as an advertising agency. The services rendered by it do not part take of or include the services (designing, conceptualising, visualizing) normally rendered by a advertising agencies. The extended definition cannot bring entirely alien and unconnected services or a manufacturing activity within the scheme of levy on service.
12. In this factual and legal situation, we are of the view that the appellant is not an advertising agency and the service rendered by it was did not advertising service so as to attract service tax, as found in the impugned order. Accordingly, the impugned order is set aside and the appeal is allowed with consequential relief to the appellant.
(Pronounced in (he open court on 7-x-06)