Service Tax Not Payable On Services Of Advertisement In Print-Media: CESTAT

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that service tax is not applicable to the service of advertisement in print media.

The two-member bench of Justice Dilip Gupta (President) and Hemambika M. Priya (Technical Member) has observed that the services of advertisement in respect of print media are exempted in terms of the negative list of services under section 66D(g) of the Finance Act.

The appellant/assessee is a manufacturer-exporter of pharmaceutical products and is a 100% Export Oriented Unit. It established representative offices in many countries to promote its goods and to liaison with the local authorities in such countries.

The representative offices do not have any independent revenue or clients and the purchase orders are entered with the clients directly by the appellant and so the representative offices do not enter into any contract with the clients. The payment for goods supplied to the customers is received by the appellant and all the expenses incurred in the supply of goods are claimed as expenses in India. The salaries of the employees working at the representative offices are also remitted by the appellant. The appellant also reimburses other expenses incurred by the representative offices for its operations. These expenses are in the nature of rent, security, electricity, etc.

The Commissioner of Central Excise & Service Tax demanded a service tax of Rs. 4,58,38,070 has been confirmed with interest and penalty.

The issue raised relates to the demand for service tax on a reverse charge basis in respect of expenses incurred in foreign currency on business promotion and other activities.

The assessee contended that both prior to and post the amendment of clause (g) of section 66D of the Finance Act, the sale of slots in an advertisement in print media did not attract service tax liability.

The Tribunal held that the appellant had discharged service tax liability on expenses for non-print media advertisements.

The CESTAT stated that it is not possible to sustain the order dated December 01, 2016, passed by the Commissioner.

Case Title: M/s Kusum Healthcare Pvt. Ltd. Versus Commissioner of Central Excise & Service Tax

Citation: Service Tax Appeal No. 50411 of 2017

Date: March 02, 2023

Counsel For Appellant: B.L. Narasimhan and Kunal Aggarwal

Counsel For Respondent: Harshwardhan

Click Here To Read The Order