TMI Blog2019 (2) TMI 1310X X X X Extracts X X X X X X X X Extracts X X X X ..... est had been given to the appellants for getting them printed in approved material. Appellants were only required to procure the material including paper, get the subject matter printed on to such paper with personalization for individual clients and post/despatch the material as per the mailing schedule. It cannot also be said of the appellants that they were engaged in display or exhibition or for that matter that they were Advertising Consultant for Reader s Digest. This agreement is a Master Agreement and not the local country agreement. Be that as it may, what comes out of para.4.02 is that the appellant is required to create specification sheet and project documents subject to Reader s Digest approval. . From such activity, it cannot be concluded that appellants were engaged in making or preparing advertisement per se - the end product on which advertisement has been printed and communicated to the clients of Reader s Digest in a personalized form is to be of dimensions which are approved by the postal authorities. None of the other functions included in para 4.02 bear any remote connection to making or preparation of advertisement or for that matter, display of such ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts had charged service tax on the full amount in the first type of invoices whereas for the second category, they had charged service tax on 5% of the billed amount and discharged VAT @ 4% on 95% of the billed amount. Department took the view that appellants should have treated the entire transaction as towards provision of taxable services under the category of Advertising Agency and discharged the service tax on the entire value. Accordingly, a show cause notice dt. 14.10.2010 was issued to appellants inter alia, proposing that (i) services provided by them to Reader s Digest India Pvt. Ltd. should be classified as taxable services of Advertising Agency as per Section 65 (105) (e) of the Act (ii) the entire amount charged for the impugned activities should be considered as value for providing taxable service (iii) demand of service tax of ₹ 67,68,618/- with interest thereon for the period April 2008 to December 2009.m (iv) penalties under various provisions of Finance Act, 1994. In adjudication, vide impugned order dt. 21.03.2012, the service tax demands as proposed in the SCN was confirmed with interest and further equal penalty of ₹ 67,68,618/- was imposed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ltd vs. Commissioner of Service Tax [2013 (32) S.T.R.783 (Tri. - LB) 4. Hi-Tech Publicities vs. Commissi8oner of Central Excise, Madurai [2018 (9) G. S.T.L.119 (Tri. Chennai) (vii) Ld. Advocate took us to the copy of agreement filed at page 45 onwards of the appeal book, particularly para 4.0.2 to point out that the products and services to be provided by appellant included creation of specifications sheet and project documents subject to Reader s Digest approval and product specification development in accordance with all applicable postal carriers and recipient delivery requirements. 3.1 On the other hand, Ld. A.R Shri B. Balamurugan submits that as observed by the adjudicating authority the transaction of appellant is a composite activity and cannot be artificially vivisected into sale and service portion . 3.2 The adjudicating authority has found in para 11 (v) of the impugned order that the claim of appellant that 95% of the value towards cost of material supplied and 5% towards services is not based on actual but only an approximation. 3.3 The goods claimed to have been supplied formed part of provision of goods and service by appellant and hence they ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard are seen in paragraph 11 (iii) as under : iii) As per the agreements and periodical work orders, the assessee has undertaken to print in paper the subject matter of Reader s Digest s marketing or promotional material as per the approved design layout and mail the material to customers as per the mailing schedule given by Reader s Digest . The assessee had provided services of procurement of material including paper, personalizing the papers, get printed the subject matter, quality control of the final product and posting/dispatching the material as per the mailing schedule. For providing the above services, the assesssee has outsourced activities such as printing, scoring, inserting in covers etc. Further they have deputed a person for co-ordinating the entire operations with the vendors and Reader s Digest. Having made these observations and analyzed the definitions of Advertising Agency Service , Business Auxiliary Service and Mailing List Compilation and Mailing Service , the adjudicating authority concludes, in the same paragraph, that service provided by appellants to Reader s Digest merits classification as taxable services provided by an advertising ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out during the period of dispute in the Finance Act, 1994, but Advertising Agency Service itself they certainly are not. 5.7 It is interesting to note that while the SCN at para 4.1 allges that appellants have provided composite service to Reader s Digest which have element of taxable service in the category of advertising agency service , business auxiliary service , and mailing list compilation and mailing service , however as per Section 65A of the Act, essential character of service is defined from the service of advertising agency and in terms of section 65A (2) (C) ibid. The service will merit classification as Advertisement Agency Service . However, the adjudicating authority in para 11 of the impugned order has, after reproducing the definitions of advertisement , advertising agency and business auxiliary service , and mailing list compilation and mailing has without further justification merely concluded that service provided by appellants to Reader s Digest merits classification as taxable provided by advertising agency in relation to advertisement. 5.8 In the event, without going into further details of the dispute or quantification of tax liability, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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