Advertising Agency

CESTAT, NEW DELHI

Dhanshree Publicity

v.

Commissioner of Central Excise, Jaipur-I

Justice R. K. Abichandani, President

FINAL ORDER NO. 1694 of 2007 SM (BR)

SERVICE TAX APPEAL NO. 188 OF 2007

November 22, 2007

Section 65 of the Finance Act, 1994 - Advertising agency - Period from 1-1-2001 to 30-9-2003 - Whether mere fact that literature provided, when displayed, would amount to an advertisement of product named therein would not be conclusive for holding that activity of painting undertaken by assessee was a service falling under category of ‘Advertising agency’ - Held, yes - Whether mere mehial expertise of painting will not drag an artist into net of taxable service of advertising agent - Held, yes [Para 7]

FACTS

The assessee-appellant was a sole proprietary concern namely ‘D’ Publicity’. The revenue came to a finding that the assessee was engaged in providing services connected with making preparation, display and exhibition of advertisements for a company ‘M’ but had not obtained registration in respect of said taxable service, ‘Advertising agency’. Consequently, service tax demand against assessee on that account was confirmed by the adjudicating authority. On appeal, the assessee contended that it was only a painter and was painting the material given to it on the walls at the sites provided to it by ‘M’; that he was in no way undertakening the activity relating to making or preparation of an advertisement, conceptualizing etc.; and that only painting work done, as per the customer’s directions could not be said to be an advertising agency’s work. The Appellate Commissioner, however, upheld the order of the adjudicating authority.

On appeal:

HELD

The material on record established that the appellant was the sole proprietor of ‘D Publicity’. If one was to go by mere business name, then there would hardly be anything for the appellant to argue, because, the word ‘publicity’’ imperiously adopted by the appellant would suggest the activities which have direct relations to advertising. However, in the facts of the instant case, it appeared that the pompous business name adopted by the appellant did not indicate the reality of the business that the appellant was only a sole-proprietor, who was entrusted the work of painting on the walls of the dealers’/stockists’ premises by ‘M’. The advertisement, which was to be painted on the walls, was, admittedly, provided by ‘M’. Even the colour legend was indicated on the photograph of the advertisement. There could be no dispute over the fact that the writing, design etc., which were provided to the appellant by ‘M’ when displayed, would amount to advertisement of its cement. Some photographs of the buildings also showed that the advertisement was painted on various buildings. However, the mere fact that the literature provided, when displayed, would amount to an advertisement of the product named therein would not be conclusive for holding that the activity of painting undertaken by the appellant was a service falling under the category of ‘Advertising agency’. A mere painter would not be concerned with the purpose for which the painting is done. His job, in a case like that would be only to use his personal skill by painting whatever material is given to him at the site, which is also provided to him. There are even way side painters who would, for an amount quickly paint out advertisement for anyone who engages them. They would surely not become an ‘Advertising agency’. Mere menial expertise of painting will not drag the artist into the net of taxable service of ‘Advertising agent’. Therefore, something more was required than mere earning of livelihood by use of the artistic talent of painting by the person who is engaged as the painter. [Para 7]

In the instant case, the matter which was to be advertised was already in the photographs supplied to the painter who merely painted the same matter on the walls. [Para 8]

In the instant case, all the activities mentioned in the definition of ‘Advertising agency’ were not carried out by the appellant, and the ratio of the decision in the case of Zodiac Advertisers v. CCE [2006] 4 STT 237 (Bang.-CESTAT) wherein it was held that mere manufacturing the product as per the instructions and specifications of the job work would not amount to rendering the service which can fall in the category of ‘advertising agency’ would apply in the instant case. [Para 9]

Therefore, the view taken by the lower authorities could not be sustained and the impugned order was to be set-aside and the demand was to be dropped. The appeal was to be accordingly allowed. [Para 10]