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2022 (7) TMI 750 - AAAR - GSTClassification of services - supply of space for advertisement in print media - whether the activity is classifiable under HSN 998363 and whether the GST @ 5% is applicable in terms of Sl. No. 21(i) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended? - HELD THAT:- HSN 998366 relates to space other than print media, i.e., advertisements on Billboards, Buildings, Vehicles, Electronic media, and advertising in video & motion pictures. Print media includes books, brochures, pamphlets, etc.; newspapers, journals and periodicals; postcards, timetables, forms, posters or other printed matter. The activity of the appellants in the subject case is sale of advertising space in print media and is not on Bill boards, Buildings, Vehicles etc. Therefore, the findings of AAR and its ruling with regard to classification of service is not in consonance with the explanatory notes. As such a fresh look at the activity or service provided by the appellant has to be examined. It is pertinent to note that, Advertising services is a specialized service, which includes a host of activities like planning, concept development, creating the basic idea for an advertisement, writing the words, selection of media to be used, design of ads, illustrations, posters, placement of advertisements in media etc. In the instant case, appellant is selling space for advertisement in print media. Further in some cases, apart from selling space, he is also providing art work, which makes the advertisement more appealing and attractive. And such additional activity is done at no extra cost. However, costing comes into picture after classification. Value addition does not have a bearing in classifying the nature of service provided. As such, the processes, the ingredients, quantity of inputs used in supply, the purpose of art work and its impact of appearance of advertisement will have a bearing on the nature of service supplied. Apart from selling the space for advertisement in print media, the appellant is also providing the services of designing or art work as pronounced in their contentions. Advertising in itself is a specialized service, where the act of exhibiting or marketing information about a product or service provided is important, so as to attract the attention of prospective customer who is likely to be a buyer or customer of the advertiser of that product or service provider. Certainly design or art work will have an impact on the content of advertisement, by which the prospective customer is attracted and falls a prey for the proposed business activity. Therefore, addition of art work cannot be called as a mere activity, but a special feature which enhances the appearance of advertisement and draws attraction of prospective customer. As the appellant is selling space and also providing design or art work, the activity cannot be called as mere selling of advertising space but ‘Advertising Service’ falling under HSN 998361. Therefore, the concept of composite service for deciding the rate of tax, cannot be applied to Advertising Service, which involves host of activities which have their own relevance and importance. The intent of leaving a space empty is for the purpose of advertisement only. In general, advertising means the action of calling something to the attention of public for the purpose of business - The appellant has not submitted any contract or agreement which tells about the scope of activity involved in printing the advertisement within the given space in print media. As such any additional work or service provided to enhance the appearance of advertisement cannot be called as mere sale of advertising space in print media.
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