2010 (4) TMI 463 - AT - Service Tax

Business Auxiliary Services - Appellant filed refund claim peid on commission receved for newspaper sales promotion services and space selling services provided by it. The Assistant commissioner rejected the claim. Held that - service in relation to sale of space had become taxable only from 01.05.2006 said activity could not be taxed by authorities prior to that date and therefore appellant not liable to pay any service tax for such activity and amount paid by it was liable to be refunded. Further held that - newspaper sale promotion service provided by appellant fell under category of a service incidental or auxiliary to activity of promotion or marketing or sale of goods produced/provided by or belonging to anothers therefore refund claim of appellant on said service was to be rejected.

Summary

Issues Involved:
1. Eligibility for refund of Service Tax paid under the category of Business Auxiliary Service (BAS) for Space Selling.
2. Eligibility for refund of Service Tax paid under the category of BAS for Newspaper Promotion.

Detailed Analysis:

1. Space Selling
Facts and Arguments:
- The appellant filed a refund claim for Service Tax paid on commission received for newspaper sales promotion and space selling services during the period from 9-7-2004 to 28-2-2006.
- The appellant argued that the insertion of section 65(105)(zzzm) effective from 1-5-2006 indicates that services related to the sale of space for advertisement did not fall under section 65(19) prior to this date.
- The appellant cited several case laws to support their claim, including BCCI v. CST, Geo Foundations & Structures (P.) Ltd. v. CCE&C, and Thriveni Earthmovers (P.) Ltd. v. CCE.
- It was argued that circulars issued by the Revenue, such as Circular No. 64/13/2003-ST, dated 28-10-2003, clarified that space selling was not taxable under any provisions of the Act.

Tribunal's Findings:
- The Tribunal noted that the sale of space per se was considered a taxable activity by the Parliament from 1-5-2006 under section 65(105)(zzzm).
- The Tribunal found that since the activity of services in relation to the sale of space was introduced as a taxable service from 1-5-2006, it could not be taxed under any other category prior to this date.
- The Tribunal concluded that the Service Tax liability discharged by the appellant for the period from 9-7-2004 to 28-2-2006 was not in accordance with the law.
- The Tribunal held that the appellant is not liable to pay Service Tax under the category of Space Selling for the specified period and is eligible for a refund, subject to the principle of unjust enrichment.

Order:
- The Tribunal remanded the matter back to the Adjudicating Authority to determine the issue of unjust enrichment and quantify the refund amount, following the principles of natural justice.

2. Newspaper Promotion
Facts and Arguments:
- The appellant rendered services for the promotion of newspapers sold by M/s. Ushodaya Enterprises Ltd. (UEL).
- The appellant argued that newspapers are not goods as defined under section 65(19) and hence, the provisions of section 65(19) would not apply.
- The appellant cited various case laws, including Indian Express (P.) Ltd. v. State of Tamil Nadu and BSNL v. Union of India, to support their claim that newspapers are not goods.

Tribunal's Findings:
- The Tribunal found that M/s. UEL are the printers/publishers of the newspaper and sell the newspaper in the market, which constitutes a sale of goods.
- The Tribunal rejected the argument that newspapers are not goods and held that the consideration paid for newspapers amounts to the purchase of goods or articles.
- The Tribunal concluded that the appellant's services for newspaper promotion fall under the category of "a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi)" of section 65(19)(vii).
- The Tribunal held that the impugned order rejecting the refund claim for newspaper promotion services was correct and legal.

Order:
- The Tribunal upheld the rejection of the refund claim for newspaper promotion services and found no infirmity in the impugned order.

Conclusion:
The appeal was allowed partly. The Tribunal ruled in favor of the appellant for the refund claim related to Space Selling, subject to the principle of unjust enrichment, and remanded the matter back to the Adjudicating Authority. However, the Tribunal upheld the rejection of the refund claim for Newspaper Promotion services.