1. These two appeals are filed by M/s. Zee Telefilms Ltd. and M/s. Star India Pvt. Ltd. arising out of two separate Order-in-Appeals having common issue and as such are being taken up for hearing together. Both the appeals are posted today for hearing their Stay Applications for waiver of pre-deposit of Service Tax demanded from them and the equivalent amount of penalty imposed on them.
2.1 Shri V. Laxmikumaran, learned Advocate submitted that both the Appellants are, inter alia, engaged in the business of acting as exclusive agent for foreign television channel to collect the dues from the customers of such channel in India; that M/s. Zee Telefilms had entered into agreement dated 1-1-1999 with M/s. Asia Today Ltd. and the other Appellants has entered into an agreement with M/s. Star Advertising Sales BV of Neetherlands; that the duty and responsibility of the Appellants are for providing of information to the foreign companies regarding displays, arranging sale of advertising and sponsorship on the channels, collecting information relating to advertising client who wants to advertise their product on any of the channels, collecting advertisement from advertisers in India and despatch the same for broadcast to the channel, collecting payment from advertiser or advertising agency and convey the same to the foreign companies and for providing potential advertisers with information regarding advertising on any of the channels. He, further, submitted that the demand of Service tax has been confirmed against them by treating them as advertising agents; that as per Section 65(1) of the Finance Act, 1994 "advertisement" includes any notice, circular, label, wrapper, document, hoarding or any other audio or visual representation made by means of a light, sound, smoke or gas; that as per Section 65(2) of the Act "advertising agency" means any commercial concern engaged in providing any service connected with the making, preparation, display or exhibition of advertisement and includes the advertisement consultant; that Clause (c) of Sub-section (48) of Section 65 defines taxable service as under: "Taxable service means any service provided to a client by advertising agency in relation to advertising in any manner." 2.2 Learned Advocate contended that the Appellants do not render any service connected with making preparation, display or exhibition of advertisement; that they had acted only as representative agency of M/s. ATL/Star TV for soliciting, or collecting of advertisement for display and passing of ready-made advertisements to them for the purpose of flashing; that the mere flashing of advertisement on the channel by ATL/Star TV itself does not amount to rendering service connected with display of advertising. In this regard, he relied upon the decision of Madras High Court in the case of Advertising Club v.Central Board of Excise & Customs [2001 (131) E.L.T. 35 (Mad.)] wherein the Madras High Court has held as under : "In the first place, let us first see where a person gets his advertisement flashed in the press media or electronic media, can it be said to be service. In our opinion, it could certainly not be said to be a service provided by the press media or electronic media. There is nothing done excepting flashing a prepared advertisement by the press media or for that matter, electronic media. The decision as to how and in what format the advertisement should be, how it should be projected, at what point of time it should be flashed, in which areas it should be exhibited or the manner in which it should be drafted and exhibited has got nothing to do with the press media or electronic media. That would be the task of "advertising agency" alone. Therefore, when we consider the situation where a client goes to the press media and asks for flashing of the advertisement and such advertisement is flashed in the media, this cannot be deemed to be a service provided by that media to such a client. Similarly, when a person approaches the electronic media and flashes an advertisement on the radio or television, as the case may be, the radio or television simply would flash the advertisement as per the instructions of the person concerned but such person will not get the advantage of the expertise of the advertising agency." 3. Learned Advocate also placed reliance on the Board's Circular F. No.341/43/96-TRU, dated 31-10-1996, wherein the Board has clarified that the amount paid excluding any commission by the advertising agency for space and time for getting the advertisement published in the printing media or the electronic media is not includible in the value of taxable service for the purpose of levy of Service Tax. Thus as per the said circular, amount directly paid by advertiser to foreign TV channel is not liable to Service tax. He also contended that when the display is a mere flash of an advertisement on the channel by M/s. ATL/Star TV, it does not amount to advertising agency service and therefore, the activity of the appellants connected with it is also not advertising agency service. He relied upon the decision of the Tribunal in the case of Contact Advertising Agency v. CCE, Chandigarh - 2001 (132) E.L.T.245 (Tri.) wherein it has been held that printing and publishing of yellow pages does not attract Service tax and that "Service Tax" is attracted on advertising agencies which are providing services to advertiser by conceptualizing, designing, or preparing advertisement.
Finally, learned Advocate relied upon the Board's Circular No.78/8/2004-S.T., dated 23-3-2004 wherein the Board has clarified that in case of free commercial time, selling the time allotted to a predecessor does not fall within the purview of advertisement service as it is merely selling of place and nothing to do with the actual presentation of the advertisement; that therefore, the Appellants who were only acting as an agent of ATL/Star TV cannot be treated as covered by definition of taxable service under the Finance Act, 1994 relating to advertisement.
4. Opposing the arguments Shri R.C. Sankhla, learned Senior Departmental Representative, submitted that the services rendered by both the appellants are in connection with the selling of advertisement from authorized advertising agency and advertiser for display or exhibition of these advertisement on Star TV/Zee TV Network; that they have been appointed by ATL/Star TV as their representative in India to sell TV advertisement; that they sell Television advertisement and collect and remit them; that they are performing various services such as obtaining the necessary RBI and other approval for effecting the remittance, maintaining the list of actual and potential clients with particulars and supplying copies of the same to the foreign companies on request; that duties and responsibilities of M/s. Zee TV Films also included collection of information relating to advertisers wanting to advertise their products and convey such details and information to ATL to enable them to sell advertisement and sponsorship on the channels and collect the, advertisement from advertisers in India; that they also provide potential advertisers with information regarding advertising on any of the channels; that in case of advertisers holdings Exchange Earners Foreign Current Account, M/s. Zee TV Films Ltd. also ensure that all advertisement materials, video tapes, cassettes with respect to such advertisements are directly despatched by advertiser to M/s. ATL; that they would also assist such advertiser in complying with any formalities required under the Indian Law and obtaining any applicable consents necessary to enable the advertiser to despatch the advertisements materials directly to M/s. ATL. Learned Senior Departmental Representative, contended that all these duties and responsibilities of the appellants clearly reveal that they are working as advertising consultant which is covered within the definition of advertising agency under Section 65(2) of the Finance Act, 1994 and as such they are liable to pay the Service tax.
5. We have considered the submissions of both the sides. Prima facie, we observe that both the Appellants are acting as an agency of M/s.
Asian Today Ltd. and Star Advertising Sales for collecting the advertising material from the prospective clients for being displayed on the channels under their control. The Revenue has not prima facie been able to show that the appellants are engaged in providing any service connected with the making, preparation, display, exhibition of advertisement in view of the decision of the Madras High Court in the case of Advertising Club (supra) and Board's Circular dated 23-3-2004.
The appellants have thus succeeded in making out a strong prima facie case in their favour for waiver of pre-deposit of entire amount of Service Tax confirmed against them and penalties imposed on them. We, therefore, stay the recovery of the entire amount of Service Tax and penalties from both the appellants. As the Commissioner (Appeals) under both the impugned orders have not decided the matters on merits, we remand both the matters to the Commissioner (Appeals) concerned for deciding the same on merit after affording a reasonable opportunity of hearing to both the Appellants. Both the appeals are allowed by way of remand. The Revenue has also filed cross-objections. The averments made in the cross-objections can be raised by Revenue before the Commissioner (Appeals) who will be deciding the matters on merits.
Accordingly, the cross-objections are also disposed of.