The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that service tax does not apply to the service of advertising.
M/s Kusum Healthcare Pvt. Ltd challenged the order dated December 01, 2016, passed by the Commissioner of Central Excise & Service Tax, Alwar, by which the demand of service tax of Rs. 4,58,38,070/- has been confirmed with interest and penalty.
The appellant 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.
According to the appellant, these 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 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.
It was argued by 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 appellant had discharged service tax liability on expenses for non-print media advertisements.
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. Further held that the appellant is not liable to pay service tax on the service of advertisement in print- media and set aside the order.
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