TMI Blog2010 (4) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... asekharan for the Respondent. ORDER M.V. Ravindran, Judicial Member - This appeal is directed against Order-in-Appeal No. 22/2008 (H-II) ST, dated 25-4-2008. 2. The relevant facts that arise for consideration are that the appellants filed a refund claim on 22-3-2006 claiming a refund of Rs. 2,68,41,849 being the service tax paid on commission received for newspaper sales promotion service and space selling service provided during the period from 9-7-2004 to 28-2-2005. The appellants paid this tax as provider of Business Auxiliary Service (BAS) under section 65(19) of Finance Act, 1994 (hereinafter referred to as the "Act"). The claim was returned to the appellants in view of the classification of the services under BAS by the Commissioner from 1-7-2003 in the Order-in-Original No. 3/2006 Adj. ST, dated 16-3-2006. On appeal against this, the Commissioner (Appeals) remanded the case to the original authority to pass an order after adhering to principles of natural justice. The refund claim consequently was resubmitted on 29-8-2007. A notice asking them to show cause why the claim should not rejected was issued on 12-9-2007. The Assistant Commissioner of Service Tax passed an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 28-10-2003 issued after the introduction of section 65(19) made it clear that the service of space selling was not taxable under any provisions of the Act. That circular is binding on the revenue, if viewed as contemporaneous expositio. He cited the case law in K.P. Varghese v. ITO [1981] 7 Taxman 13 (SC). It is a settled law that circulars issued by the Revenue are binding on the revenue until withdrawn. Following case-laws are cited : (i) Suchithra Components Ltd. v. CCE 2007 (208) ELT 321 (SC). (ii) Ranadey Micronutrients v. Collector of Central Excise 1996 (87) ELT 19 (SC). 3.4 It is submitted that "Space" in a newspaper cannot be viewed as "goods" as it does not satisfy the tests laid down by the Hon'ble Supreme Court for something to be goods. He referred the following case-laws : (i) BSNL v. Union of India [2006] 145 STC 91/3 STT 245. (ii) Tata Consultancy Services v. State of A.P. [2004] 137 STC 620. Besides, the very fact that Parliament has used the words "sale of space" in section 65(105)(zzzm) is by itself sufficient to infer that "space" has been treated as something distinct from "goods". has treated the activity of making available of space as a sale. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Plan Ltd. v. Customs Excise Commissioners-No. 2 2001 (2) WLR 329/2005 (2) VST 224 (HL). (ii) Customs Excise Commissioners v. British Telecommunications Plc.[1999] 1 WLR 1376/2005 (2) VST 261 (HL) 3.11 It is submitted that in view of the above, even if the incidental presence of paper as a medium is to be taken into account, as it is the content which is the dominant/principal subject of supply, that content in the medium cannot be said to have been either produced or belonging or provided by UEL. The word "produced" as found in section 65(19)(i) shows that the subject-matter of marketing/promotion/sale must be goods which are brought into existence for the first time by the client. The word "belonging" found in section 65(19)(i) shows that the client must have ownership over the subject-matter of the promotion/marketing/sale. The word "provided" will have to be read noscitur a sociiss. Following case-laws are cited : (i) Acqueous Victuals (P.) Ltd. v. State of UP AIR 1998 SC 2278. (ii) State of Rajasthan v. Sripal Jain AIR 1963 SC 1323. 3.12 It is submitted that in view of the following contextual compulsions, the expression "goods" found in section 65(19) must be int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e occupied, engaged or to be engaged; (iii) Section 65(47): Franchise - This provision uses the words to sell, to manufacture and to provide; (iv) Section 65(105): Taxable Services - This provision starts with the words provided, or to be provided. 3.15 It is submitted that if the Act is read as a whole and one part of the Act is used to interpret another, as it should be, section 65(19)(i) can be said to have operation only when, if at the time of the promotion/marketing, the goods are existing goods and available with the client. He referred the case-law in Philips India Ltd. v. Labour Court AIR 1985 SC 1034. 3.16 It is submitted that importantly, as the Act is a taxing statute, section 65(19)(i) and section 65(19)(ii) will have to be strictly construed. The language must wholly govern the interpretation. There is no room for any intendment. The economic results sought to be obtained is not relevant for interpretation. Words cannot be added to achieve the spirit or intention of the Legislature. The following case-law was cited: Muthuram Agarwal v. State of Madhya Pradesh AIR 2000 SC 109. In any view, if two views are possible, a construction which supports the taxpaye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the appellant herein is soliciting clients for sale of space in the newspaper. The impugned order has rejected the contentions of the appellant by recording the following findings : "In relation to the promotion of sale of space in the newspapers, it is required to be noted that the original authority had observed that there is no hostility between section 65(105)(zzzm) and section 65(19). He said that promotion of sale of space is not the same thing as sale of space per se. A perusal of the definition of section 65(105)(zzzm) does not suggest anything to the contrary. The expression "in relation to" was not prefixed to that part of the definition which excluded sale of space in "print media" but was only used before the description of the service. The result is that while the taxing part was expanded, the exclusion part is restricted. Therefore, the first argument is not acceptable. There is no need to apply the principle of harmonious construction when there is no discord between section 65(105)(zzzm) and section 65(19). Secondly, it is argued that since neither they were promoting or marketing any goods produced, provided or belonging to their client viz., UEL or any ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , cell phones, automated teller machines, internet; Selling of time slots on radio or television by a person, other than a broadcasting agency or organization; and Aerial advertising Explanation 2.—For the purposes of this sub-clause, "print media" means "book" and "newspaper" as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867 (25 of 1867)." 7.2 On plain reading of the above section, it is very clear that any services provided by any person to any other person in relation to sale of space would be taxable from 1-5-2006. It is undisputed in the case before us that the appellant has been selling the space or providing the services in relation to the sale of space to M/s. UEL during the period 9-7-2004 to 28-2-2006. Since, the activity of services in relation to sale of space has come into the statute from 1-5-2006, we find that the said activity cannot be taxed by the authorities prior to that date. It flows that the service tax liability discharged by the appellant is not a tax which has been collected by the lower authorities in accordance with law. We find that the proposition put forth by the learned Counsel that after specific categor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to accept this proposition of the learned Counsel, only on the ground that newspaper may be convenient and cheap vehicle of conveying or carrying the news, which is definitely procured after payment of a consideration by an individual. The said consideration paid by an individual would amount purchase of a kind of goods/ article. Further if they are not considered as goods, the same can be an article which is bought and sold in the market. If it is bought and sold in the market, then provisions of section 65(19)(i) with get attracted and activity of the appellant will fall under the category of section 65(19)(vii) which reads as under : "A service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any information technology service and any activity that amounts to "manufacture" within the meaning of clause (f) of section 2 of the Central Excise A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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