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TMI Blog2019 (2) TMI 1310X X X X Extracts X X X X X X X X Extracts X X X X ..... said parent company had entered into a Master Agreement dt. 17.10.2017 with the Reader's Digest Association, New York, relating to provision of products and services by offices of Williams Lea in various countries to Reader's Digest. The Master Agreement provided that the original offices of Williams Lea & Reader's Digest shall enter into a region specific agreement in line with the Master Agreement. Accordingly, appellants had also entered into a local country agreement dated 16.03.2008 with the Reader's Digest India Pvt. Ltd. From the nature of work performed by the appellants, it appeared to the department that the appellants had provided composite services to Reader's Digest in relation to preparation of their promotional / marketing ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012, the service tax demands as proposed in the SCN was confirmed with interest and further equal penalty of Rs. 67,68,618/- was imposed under Section 78 of the Act. Penalty was imposed under Section 77 ibid. Hence this appeal. 2. When the matter came up for hearing, on behalf of the appellants, Ld. Advocate Shri Harish Bindu Madhavan, Advocate made oral and written submissions which can be broadly summarized as under : (i) contract entered with their clients was in the nature of composite services. (ii) most of the component of the contract involves goods and only a meagre portion of the contract involves service. (iii) appellant had merely acted as a facilitator of the activities wherein they sourced goods from vendors and coordinate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocate placed reliance on the ratio of following case laws : 1. Safety Re-treading Co (P) Ltd vs. Commissioner of C.Ex, Salem [2017 (48) S.T.R.97 (S.C.)] 2. Imagic Creative Private Ltd vs. Commissioner of Commercial Tax [2008 (9) S.T.R.337 (S.C.)] 3. Hindustan Aeronautics 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment agency" means any person engaged in providing any service connected with the making, preparation, display or exhibition of advertisement and includes an advertising consultant. (Section 65 (3) of Finance Act, 1994 as amended) iii) "Taxable Service" means any service provided or to be provided to any person by an advertising agency in relation to advertisement, in any manner. (Section 65 (105) (e) of Finance Act, 1994 as amended) 5.2 The combined take away from the above definition is that the services provided, for being exigible to service tax liability would have to be one which is connected with the making or preparation of an advertising or its display or exhibition. It is therefore relevant to examine whether the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 agency in relation to the advertisement under Section 65 (105) (e) of the Act. 5.4 We are unable to fathom these conclusions of the lower appellate authority. Surely it cannot be said of the appellants that they had prepared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents. This only means that 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 advertisement. 5.6 In the circumstances, we are certainly not enthused by the attempt of the department to straightjacket the appellants into the category of 'Advertising Agency Service'. This is not to say that activity provided by appellants does not fall under any taxable category listed out during the period of dispute in the Finance Act, 1994, but Advertising A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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