The Customs, Excise and Service Tax Appellate Tribunal’s (CESTAT) Hyderabad Bench has held that service tax could not be levied on the activity of printing advertising content on PVC material as it amounted to manufacture, legal website livelaw.in reported.
A two-member bench headed by Justice Dilip Gupta (President) and Technical Member PV Subba Rao said the respondent/assessee said it is into the business of wide-format printing. The customers provide “ready-to-print” advertisement content, which the respondent prints on PVC material, which could be PVC flex or PVC board, procured from the market, the order said.
The respondent, the court observed, has no authority to make any changes since his job is limited to printing. Thus, according to the respondent, it has no role in the ‘making of the advertisement’, it said.
The department had earlier issued a show cause notice to the respondent for recovery of service tax for the period April 2007 to March 2012.
The assessee argued it does not design or conceptualize the advertising content but just prints as per the designs supplied by the customers. The assessee also argued it does not have any specialisation to create design so as to be covered under the term ‘making of advertisement’.
The department had assailed an earlier order passed by the Commissioner of Customs, Central Excise and Service Tax, Hyderabad, dropping show cause notices against the respondent.
The department referred to the bills raised by the respondent, saying the consumers are deducting TDS, which clearly indicates that the activity undertaken is a service.
The assessee, however, contended that the activity of printing of ‘ready-to-print’ advertisements on PVC flex material and the sale of printed material amounts to the sale of goods but not a service. And hence, no service tax should be payable .
According to the assessee, a person is considered an ‘advertising agency’ if he provides any service related to the creation, preparation, display, or exhibition of an advertisement. The assesse said the argument that it would come under the ambit of an advertising agency is not correct.
The CESTAT then upheld the order of the commissioner and stated that the printing activity would not be subjected to service tax.