OIO No. 22/STC/AHD/ADC(JSN)/2013-14

BRIEF FACTS OF THE CASE

M/s Saket Project Ltd., located at 1, Panchsheel Society, Ushmanpura Ahmedabad (hereinafter referred to as the said ‘M/s SPL/ M/s Saket ’) are providing taxable services under the various categories. During the course of audit of records of M/s Five Star Pharmaceuticals, Ahmedabad (A Division of M/s Saket Projects Ltd., Ahmedabad) conducted by the Central Excise Officers of Ahmedabad-I Commissionerate, it was gathered that the said service provider i.e M/s SPL, had received the income as per their balance sheet and financial records as per details given hereunder:

Financial year Income received under the head of Event Management Service

Income received under the head of advertisement

Service

2005-06 1,95,32,504 36,46,200

2006-07 1,07,11,364 4,50,540

2007-08 1,69,94,237 6,95,787

2008-09 92,67,500 20,84,567

2009-10 1,77,55,740 38,28,031

April-2010

to July-2010

1,11,04,900 16,76,850

2. It was observed by the Audit that M/s SPL were not paying service tax in respect of taxable services provided by them in respect of the above referred both the services.

3. However, it was noticed that they were actually paying service tax only in respect of taxable services namely: Management Consultant Services and Event Management Services. They haD obtained Service Tax Registration No.AACCS6912JST001, dated 18-02-2005 and were registered with Range: V, Division: I, Ahmedabad. It was also observed that they were not paying service tax on the value of different types of taxable services provided by them falling under various categories namely: (1) Sale of Space or Time for Advertisement Service (2) Business Exhibition Service (3) Commercial training and Coaching Centre Service (4) Sponsorship Services. It is pertinent here to note that the taxable value of such services was also not reflected in the S.T.-3 returns filed by them from time to time.

4. Whereas the service tax in respect of Sponsorship Service, the liability of payment of service tax is on the service recipient in view of the provisions of Rule 2 (1) (d) (viii) of the Service Tax Rules, 1994.

5. The said Service Provider: ‘M/s SPL’ were issued with summons to furnish records/documents/Returns/Balance sheet as mentioned in the schedule to the summons issued to them. Accordingly, various letters dated 10.11.2011, 15.12.2011, 16.12.2011 and 20.12.2011 and 27.12.2011 were also issued to them to tender details related to their service activities.

6. During investigation, statement of Shri Manoj L. Patel, Senior Manager (Finance) (Authorised person) of M/s, Saket Project Ltd., Ahmedabad was recorded under Section 14 of the Central Excise Act, 1944 read with Section 83 of Finance Act, 1994 on 23.03.2012 wherein he interalia deposed that:

“He was Senior Manager (Finance) and authorized signatory of said Service provider and that he was looking after all the day to day work of the Company relating to Finance including taxation/ government work for last 16 years; they are engaged in publication of Industrial Magazines, Management Consultancy in the area of energy audit and event management; that the company was incorporated in 1995 and company was registered with Service tax having Service Tax Registration No.AACCS6912JST001 for the services namely “Management Consultant Service” and

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“Event Management Service” and they are filing Service Tax Returns regularly for such taxable services;

They were publishing magazines namely “Textile Review”, “Steam & Boiler review” and “Indian Port & Infrastructure Review”; that all these magazines were registered with Office of the Registrar of News Papers for India, New Delhi and having Registration No. GUJENG/2006/17932 dated 14th Dec, 2006, GUJBIL/ 2008/23159, GUJENG/2009/31781 for the magazines “Textile Review”, “Steam & Boiler review” and “Indian Port & Infrastructure Review” respectively.

He further stated that in respect of non payment of service tax on the income generated under the services namely “Event Management” and “Advertising Service” shown in the table below:

Name of the Service

FY 2006-07 FY 2007-08 FY 2008-09

FY 2009-10 FY 2010-11

Event Management

Service

1,07,11,364 1,69,94,237 92,67,500 1,77,55,740 1,95,12,900

Advertising Agency Service

4,50,540 6,95,787 20,84,567 38,28,031 53,10,712

that the so-called “Event Management” service under which the department proposes to levy service tax was exempt as per guidelines as given in the C.B.E.C. instructions i. e. para 5 of the Annexure IV of definition of “Event Management Service” and it read as under:

“ A point has been raised as to whether in the case where event is organized or managed in house but certain contractors are appointed say for stage/mandap preparation, for lighting/ sound system for advertising event etc and revenue is generated by renting out the exhibition space and sale of tickets, whether Service Tax will be leviable on the amount charged by the contractors or on the amount generated by sale of space or tickets etc, it was clarified that the tax is not on the event on the service provided for managing an event, therefore, in a case where the event is organized or managed by organizer/ sponsor himself no service tax is payable as event management. It was clarified that the service tax under the category of event management is not leviable on the sale proceed of tickets or revenue generated from sale of space”.

He also deposed that on considering the said clarification published by the CBEC related to “Event Management” they are not liable to Service tax under this category.

On being asked about exact nature of “event management service” and activities carried out by them under this category of services, he deposed that they were managing event at their own on different subjects like “Textiles”, “Steam & Boiler”, “Energy”, “Food Security”, “Waste Management” and “Port & Infrastructure” in such events, they were inviting eminent speakers to deliver the lectures on the subject concern. They were also inviting the delegates, parties related to that subject for participation in “Events”, the concerned parties and delegates so invited were charged fees by way of delegate fees and sponsorship charges.

On being asked as to whether he was agreed that in conducting the aforementioned “Events”, they are organizer of the events or otherwise, he deposed that it is true that they are ORGANIZERS of the “Events”.

He had been given to read the definition of “Event Management” as provide in Finance Act, 1994 in its Section 65 (40) of the Finance Act, 1994. On being asked that from the above definition, it was clear that they are acting as Organizer of the event and the participants who enter into in the event after paying certain consideration and therefore the organizers of the event are also taxable or otherwise, he stated that they are organizing the events at their own not giving any service as event manager to any one and it is service to themselves and thus not taxable.

He was shown their own bill No.043, dated 22.1.2007 issued to M/s Suzlon Energy Limited, and on the body of bills, it read that: “Being the charges towards ‘diamond sponsorship’ at the third conference on India energy sector ‘Synergy with energy and India energy show-2007’ Exhibition to be organized at Tagore Hall, Paldi, Ahmedabad between 24 to 26 Feb, 2007. In this bill he has been

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asked to explain as to what is ‘Diamond Sponsorship’ and what was the exhibition. In this regards, he stated that they are offering sponsorship to the party to participate in the conference and exhibition. So, M/s Suzlon Energy Limited is one of their sponsors as a Diamond Sponsor. And some Sponsors ask for stalls to be displayed at that time and they are providing stalls to exhibit their Company Products.

He was shown bill No.105, dated 20.2.2007 issued to M/s Industrial Extension Bureau for Rs.1,50,000/-, and on the body of the said bill, it reads that: “Being charges towards advertisement in Indian Textile-2015”. He has been asked to clarify and specify what “Indian Textile-2015” is. In this regards, he deposed that “Indian Textiles- 2015” is a book published by the Company.

On being asked as to whether tax is paid on this receipt as the advertisement is published in a book and not a registered magazine or otherwise, he stated that they have not paid any Service Tax on advertisement published in book Indian Textiles– 2015.

On being asked to specify that in the events organized by the participants exhibits their products, technique other similar things or otherwise, he deposed that he has already stated that their events are not trade or sale-promotion oriented but the same are knowledge and technical know-how promoting events by listening to lectures and presentations. He also deposed that some times exhibition of the products of the participants.

On being asked that it can be said that they were using their expertise in organizing the events and thus they are event managers or otherwise, He replied in negative and disagreed, as the same question was put to them during audit by the Central Excise Officers. He also deposed that they are themselves organizing the events and no event manager is engaged or in other words they are themselves organizers of the events.

On being asked about so-called Advertising Agency Service”, he stated that they do not prepare or say draft or design the advertisement but publish the same in their magazines which are “ Textile Review”, “Steam & Boiler review” and “Indian Port & Infrastructure Review”. He also stated that all these magazines are registered with Office of the Registrar of News Papers For India, New Delhi and having Registration No. GUJENG/2006/17932 dated 14th Dec, 2006, GUJBIL/ 2008/23159, GUJENG/2009/31781 for the magazines “Textile Review”, “Steam & Boiler review” and “Indian Port & Infrastructure Review” respectively, which has already been stated herein above . In other words he said that all their magazines are like any other news papers and it is clear that advertisements published in news papers as well as yellow pages are exempt from levy of Service Tax as they are printing readymade advertisements. He also deposed that in their case too, they publish readymade advertisements in our magazines as stated by me herein above.

On being asked as to whether they are canvassing the advertisement givers and promoting them to give add in their magazines, he stated that all their advertisements are readymade given by the advertisement givers and their bills are only relating to publication thereof in their magazines and their magazines gets advertisements related to field or say subject to which magazines relates. He also deposed that for such advertisements they need not to canvass but the strength and acceptability of their magazines attracts advertisement givers to publish their advertisements in their magazines.

On asking about any rent income under the service category namely: “Renting of Immovable Property”, he stated that they do have rent income on “Renting of Immovable Property” to the tune of Rs.6,00,000/- in the year of 2006-07 particularly in the month of April, May and June, 2006 recovered from M/s Akar Infomedia Pvt. Ltd. for having providing their office space for three months but the “renting of Immovable Property” came in to Service Tax net with effect from 1.6.2007 and therefore the same was not taxable at the relevant time.

On being asked regarding the income generated in relation to dealing with M/s Granth Vitran and M/s Sapna Industrial & Allied Publications P. Ltd., he stated that M/s Granth Vitran and M/s Sapna Industrial & Allied Publications P. Ltd. are book sellers, who sell their published magazines and books and hence their relation with M/s Granth Vitran and M/s Sapna Industrial & Allied Publications P. Ltd. was not related to any service.”

7. During investigation, Statement of Shri Manoj L.Patel, Senior Manager (Finance) (Authorised person), of M/s, Saket Project Ltd., Ahmedabad was recorded under Section 14 of the

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Central Excise Act, 1944 read with Section 83 of Finance Act, 1994 on 14.04.2012 wherein he interalia deposed that:

“I am shown a leaflet or say pamphlet entitled “STEAMTECH-2012” the front page or say cover page reads as under:

“SteamTech-20125th national Conference on boiler and steam system

ThemeIndian Steam & Boiler Industry:Opportunities through competitiveness & InnovationsDate: January 20-21, 2012Venue:J B Auditorium, Ahmedabad Management Associations, Panjarapole-IIM Road, ATIRA Campus, AhmedabadOrganiser: Saket Projects LtdMedia Partner: Steam & Boiler

Bilingual Monthly Magazine. Supported by:IBMA Indian Institute of Indian Drug The Gujarat Dyestuff GujaratIndian Chemical Engineers Manufacturer manufacturer Paper MillsBoilers Ahmedabad regional Association Association AssociationAssociation Centre Gujarat State Board”

I am also given to read the page No 2 of the leaflet and at the bottom of page No.2 the leaflet published by M/s Saket Projects Ltd reads as under:

1. As Sponsor:

Since decision makers and top management level executives from the key industries are to participate in this conference, this will be an ideal platform for those who deal with this Sector to promote their products and services. Various sponsorship options; each having specific promotional privileges like corporate presentations-slot, printing of logo on conference back drop and other display materials, advertisement in conference paper etc.; are available.

2. As Advertiser :

The 4th Anniversary issue of Steam & Boiler Review will be released coinciding with this conference. This issue, besides regular features, will also contain compilation of conference papers to be presented during the conference. This anniversary issue will be distributed to all conference participants, apart from the regular mailing list. And hence, this will be a unique opportunity to promote products and services by inserting advertisement in this special issue various advertisement option are available.

3. As Delegate:

To attend the conference, send the delegates registration form duly filled in, along with necessary registration fees:

Rs. 2000/- per delegate

Rs. 1500/- per delegate for two or more registrations.

4. AS Exhibitor

STEAMTECH TECHNOLOGY SHOW -2012 will provide a unique opportunity to exhibitors in showcasing their capabilities in terms of new product innovations emerging technologies, energy efficient boiler etc. Before the most appropriate target audience, consisting of national as well as international players in the field of boiler.

Exhibition will be opened throughout both the days and all the sessions and breaks will occur in a continuous area to maximize net working and convenience for attendees.

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I have gone through the above leaflet and contains therein as reproduced herein above, I have put my dated signature on the leaflet in token of having read the same. After going through the leaflet as described herein above, I am shown the texts of our income bill No.Text/008, dated 13.11.2009, the narration made in the bill reads as “Being the charges towards Prime Sponsorship at the conference TEXCELLENCE 09 TO BE HELD ON November 13-14 2009 at AMA Auditorium, Ahmedabad” after reading the same.

After reading the same and on being asked as to on receipt of sponsor consideration what favours and/or services or/and priorities were given to the party who paid the sum as Sponsorship, I state that we are offering sponsors to display their logo, presentation and advertisement in conference papers published during the conference.

Sr.

No.Name of the

party invoice No. date Particular (Narration)Amount (Rs.)

1 Reliance Industries Ltd

Text/ 008 11/13/2009

Being the charges towards Prime Sponsorship at the

conference TEXCELLENCE 09 TO BE HELD ON November 13-14

2009 at AMA Auditorium, Ahmedabad

3,50,000

On being asked about as to whether he agrees that the sponsorship providing party has done some favour by M/s Saket Projects Ltd. by way of putting their advertisement or display of logo or any other privilege, he replied in assertive.

On asking about what the delegation fee is and what the delegates gain in participating in any given conference, he deposed that they are inviting delegates from the concerned industry and they are paying participation fees which called delegate fees and they are benefited by exchange their views as well as interaction with the industry people.

On asking about the lecture givers or say presentation givers in the above conference and as to whether they are paid for having imparted their knowledge or say expertise in the given field, he deposed that lecturers and say speakers invited are from industry, Government as well as researchers and they are not paying anything for their knowledge or having participation for exchange their knowledge in the conference. They are some times arranging their to and fro conveyance, fare and lodging, boarding on their request.

On asking about the whole aim of organizing the so-called conference, which apparently has sponsors, delegates and exhibit their products also, he deposed that whole aim of organizing conferences is to have awareness to the people of industry by exchange of knowledge of supply, demand, technical knowledge, Govt. policies, new researches etc. regarding particular industry to the industry people. Regarding advertisers, he stated that, they are accepting advertisement form the parties of the particular industry who wish to advertise themselves and their product amongst the people who are participating during the any given conferences. Similarly, particularly in their three conferences on STEAM TECH, WASTE MANAGEMENT and ENERGY, some of parties willing to only display their products but not selling their products amongst the participants and sponsors by way of stall in the exhibition.

On asking about three magazines being published by them namely “Textile Review”, “Steam & Boiler Review” and “Indian Port & Infrastructure Review” as in last statement he has stated that they are registered with the Registrar of News Papers of India. Also on being asked about to specify whether they are news papers or otherwise, he deposed that he would like to state that, above three magazines are like news papers because in those magazines all the information like policies, researches, current scenario of the industry, development of the industry are published.

On asking about to specify further as to whether magazines named “Textile Review”, “Steam & Boiler Review” and “Indian Port & Infrastructure Review” are subject specific viz. “Textile Review”,

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deals with the topic textile, he replied in assertive and stated that it is deals with textile and allied topics.

On being asked that as per PRB Act, provisions merely a registration with the Registrar of News Papers of India would not qualify a magazine or paper to be a news paper. It only entitles a registered papers to enjoy the benefit of Advertisement from the Government as can be seen from the magazine “Indian Port & Infrastructure Review” for the month of Feb, 2012, where on the second page (page next to the cover page) an advertisement of Gujarat Govt. appeared named “Gujarat- A Model of development”, he stated that as per their view, they are registered with RNI as periodicals publisher and their aim is not only to get advertisement from the industry or any other Govt., Semi Govt., Corporations and institutions, their magazines are regularly published even if they do not have any advertisement in the magazines.

This is to say that the P.R.B. Act, 1867 and the rules made hereunder define newspapers as printed periodical work containing public news or views on public news. Therefore, any publication which does not contain predominantly news and views on news, cannot be considered a newspaper, which also means any insertion of stray item of news does not qualify a publication to be called a newspaper. Newspapers are registered with RNI under the said Act, but a mere registration with RNI does not automatically qualify them as newspapers. Registration is done at the instance of the intending publishers under two conditions: (i) it should have a periodicity and (ii) it should be authenticated by the magistrate concerned where from the proposed publication shall be printed. A question therefore arises as to why publishers are willing to register their publications with RNI the reason is that registration under PRB Act, entitles them to get several concessions such as postal rebate, customs duty concession in terms of import of news print, import of machinery for modernizing printing press and seeking advertisement revenue from State and central Governments. Applying the above conditions on three periodicals published by M/s Saket Projects Ltd., it can be convincingly said that they are not news papers in spite of holding registration from RNI. On being asked about to agree with the above, he stated that their periodicals might be not considered as news paper. But they would like to state that their periodicals are not only for seeking advertisement from the Govt., or Industry and they say that they are not acting as advertisement agency anywhere in the magazines, they are publishing the magazine even if there is no advertisement received from any party, Govt. etc., so they are not an advertisement agency.

On asking as to whether it is true that there may be instances when the magazines were published without having any advertisement in them. However, as and when the advertisements are received may be Govt. or of private party, the same are published by giving space in the magazine, he replied in assertive.”

8. During investigation, Statement of Shri Manoj L.Patel, Senior Manager (Finance) (Authorised person), of M/s, Saket Project Ltd., Ahmedabad was recorded under Section 14 of the Central Excise Act, 1944 read with Section 83 of Finance Act, 1994 on 28.07.2012 wherein he interalia deposed that:

“Our Company has obtained service tax registration no. AACCS6912JST001 on 18-02-2005 and has filed S.T.-3 returns with the concerned Range Superintendent in charge of the Range as per details given hereunder:

Sr.

No.

Period of S.T.-3 return Date of filing S.T.-3 return in respect of Event Management

Service

Date of filing S.T.-3 return in respect of

Management Consultant Services

1 01-04-06 to 30-09-06 20-10-06 20-10-06

2 01-10-06 to 31-03-07 23-04-07 23-04-07

3 01-04-07 to 30-09-07 22-10-07 23-10-07

4 01-10-07 to 31-03-08 22-04-08 22-04-08

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On being asked about various incomes as shown under the different heads, like PUBLICATION INCOME and INCOME FROM EVENT MANAGEMENT in the Balance Sheets/ Profit & Loss Accounts for the F. Y. 2007-08 to 2010-11 and however, when the details of activities as observed from invoices raised by the Company while providing the different types of services to your clients, it has been seen that such income is for such activities which may be well covered under the definition of taxable services as shown against them hereunder in the respective columns:

Sr.

No.

Nature of activities as shown in invoices

Taxable services under which such activities is covered

Clause of Section 65 (105) of the Finance Act, 1994 under which it covered

1 Income in respect of Advertisement in

Conference Paper/ books/ publications/ magazines etc.

by your company

Sale of Space or Time for Advertisement Services

65(105) (zzzz)

2 Participation charges at the Conference on various

subjects held by your company

Commercial Training or Coaching Services

65(105) (zzc)

3 Delegation fees/ charges & Registration Fees/ charges in respect of Exhibition held

by your company

Commercial Training or Coaching Services

65(105) (zzc)

4 Sponsorship charges at the conference/ exhibitions held

by your company

Sponsorship Services 65 (105) (zzzn)

5 Stall charges at the Exhibition held by your

company

Business Exhibition Services 65 (105) (zzo)

He was asked to clarify as to why they have not discharged service tax liability under the respective category of taxable services as shown above and as to why their Company had not added the above stated categories of taxable services in your Service Tax Registration from time to time while providing such taxable services. In this respect, he deposed that they have not discharged service tax liability under the respective category of taxable services and their Company has not added the above stated categories of taxable services in our Service Tax Registration from time to time while providing such taxable services, for the following reasons and grounds as discussed hereunder point-wise:

Point no. 1: Regarding income of our company in respect of advertisement in Conference Paper/ books/ publications/ magazines etc. published by our company, it is to clarify that above stated Conference Paper/ books/ publications/ magazines etc. are in the category of publication and advertisement received for these publications, such services known as space selling, can not attract service tax under the category of taxable services namely: “Sale of Space or Time for Advertisement Services”. The reasons for our conclusion for this are as under:

We are not in the service of preparing the advertisements, lay-outs, designing, conceptualizing, visualizing etc. We are only got it (the advertisements) duly printed from the printing press in our publications and so we are not liable to pay service tax in this behalf. In view of the above, we have not discharged the service tax liability in this regards and we have not amended our service tax registration accordingly.

Point no. 2 & 3: As per our views, the participation fees/ Delegation fees/ charges & Registration Fees/ charges in respect of various conferences held/ managed by our company during the F. Y. 2007-08 to 2010-11, are part of conferences and exhibitors are participating in our some of conferences. So delegate fees/ participation fees received by us can not be considered as

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commercial training and coaching services. It is also to state that such conferences at some of times may be with the exhibitions and at some of the time it may be without any exhibitions. In view of the above, we have not discharged the service tax liability in this regards and we have not amended our service tax registration accordingly. Similarly, particularly in our three conferences on STEAM TECH, WASTE MANAGEMENT and ENERGY, some of parties were willing to only display their products but not selling their products amongst the participants and sponsors by way of stall in the exhibition.

Point no. 4: It is the clear cut law, that is to say, as per Rule 2 (1) (d) (vii) of the Service Tax Rules, 1994, the liability of payment of service tax on the sponsorship service is on the service recipient and not on the service provider. We are of the view that the sponsor who have made payment to our company during the F. Y. 2007-08 to 2010-11 for the sponsorship of holding conferences during those years, are the service recipients in respect of this taxable services as they have received such taxable services. In view of the above, we have not discharged the service tax liability in this regards and we have not amended our service tax registration accordingly. However, the details of such sponsors as asked for, are furnished today vide letter dated 27-07-2012 wherein names and addresses of such sponsor during the F. Y. 2007-08 to 2010-11 has been given with amounts of sponsorship paid to our company has been shown against their names.

Point no. 5: In respect of Stall charges at the Exhibition held by our company, it is to clarify that the sub-clause of Section 65 of the Finance Act, 1994 as amended by the finance Act, 2002 clearly stating that revenue which has been generated by renting out of exhibition place, is under event management and where the event is organized or managed by in-house, no service tax is payable as event management services. Further it has been also clarified that service tax under the category of event management services is not leviable on the sale proceed of tickets or revenue generated from the sale of space. In view of the above, we have not discharged the service tax liability in this regards and we have not amended our service tax registration accordingly.

It has been observed from the figures of the total income as shown in the respective Balance sheets and details of the invoices raised in respect of such services provided by you to this office that there is difference of such income generated by your company as mentioned below. He has been asked to explain the reasons thereof and furnish the remaining invoices which are still not provided during the enquiry.

Particulars and financial years 2006-07 2007-08 2008-09 2009-10 2010-11

Total as per invoices provided by you. 67100 3414947 3842802 9443114 3959675

as per B/S (Event Management Services) 10711364 16994237 9267500 17755740 19512900

as per B/S (Advertisement Services) 450540 695787 2084567 3828031 5310712

Total as per balance sheet 11161904 17690024 11352067 21583771 24823612

Difference 11094804 14275077 7509265 12140657 20863937

In this respect, he deposed that the difference between the figures of the total amount as shown in the invoices and the income as shown in the balance sheets for the F. Y. 2007-08 to 2010-11 is furnished hereunder:

(1) As per our view, the difference shown by the department should not be there as most of all the invoices have been provided to the department. Therefore, we are of the view/ opinion that there should be some mistake in calculation while arriving at the figures as communicated vide summons dated 18-07-2012.

(2) We have issued invoices for all the activities except the delegate fees/ participation fees for which we are not issuing the invoices. This is because of the fact that we are accounting the delegate fees/ participation fees on cash basis and no outstanding remain or carried forward for receipt of such fees.

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(3) However, it is also to clarify that these figures as shown as income generated in the respective balance sheets for the F. Y. 2007-08 to 2010-11, are quite tally with the respective ledgers as provided by our company to the department.

He has been asked to furnish the figures of REVENUE RECEIPTS, that is to say, consideration/ money received/ realized along with the date of receipts thereof against the above referred activates/ services during the F. Y. 2007-08 to 2010-11 separately year-wise. In reply thereto, he submitted the letter dated 27-07-2012 in which the details regarding the Revenue Receipt for the F. Y. 2007-08 to 2010-11 has been furnished.

On being asked about to state as to whether they have charged and collected service tax in the invoices/ credit notes/ debit notes/ any adjustments in the books of accounts/ reimbursements etc. in respect of the above activities/ services rendered to various clients for whom no service tax liability has been discharged by their company so far, he deposed that they have not collected any service tax in their invoices where activities are not liable for service tax as discussed hereinabove.

He has been asked to furnish the details of REVENUE RECEIPTS, that is to say consideration/ money received/ realized along with the date of receipts thereof, in respect of sale of magazines/ books and subscription thereof, during the F. Y. 2006-07 to 2010-11 separately year-wise. In this regards, he submitted letter dated 27-07-2012 in which the details regarding the sale of magazines/ books and subscription thereof, during the F. Y. 2006-07 to 2010-11 separately year-wise for the F. Y. 2007-08 to 2010-11 has been furnished.

On being asked about the delegation fee and what the delegates gain in participating so called conference, he deposed that they are inviting delegates from the concern industry and they are paying participation fees, which is called delegate fees and they are (delegates) benefited by exchange of their views as well as interaction with the industry people.

On being asked as to whether they are inviting or say deputing lecturers or say experts or faculty to impart knowledge to the delegates, he has agreed thereto/ replied in positive.

On being asked about lecture givers or say presentation givers in the above conferences and whether they are paid for having imparting their knowledge or expertise in the given field to the delegates, he deposed that lecturers and speakers are invited from industry, Government as well as researchers and they are not paying anything for their knowledge or participation for exchange their knowledge in the conference, he deposed that they are, however, some times arranging their to and fro conveyance, fare and lodging, boarding on their request.

On being asked regarding aim is of organizing the conferences, which has sponsors, delegates and exhibit their products also, he deposed that whole aim of organizing conferences is to have awareness to the people of industry by exchange of knowledge of supply, demand, technical knowledge, Govt. policies, and new researches etc. regarding particular industry to the industry people. Regarding advertisers, he stated that they are accepting advertisement from the parties of the particular industry who wishes to advertise themselves and their product amongst the people, who are participating during the any given conference. Similarly, particularly in their three conferences on STEAM TECH, WASTE MANAGEMENT and ENERGY, some of parties were willing to only display their products but not selling their products amongst the participants and sponsors by way of stall in the exhibition.

On being asked about the three magazines being published by the assessee, namely “Textile Review”, “Steam & Boiler Review” and “Indian Port & Infrastructure Review” as in last statement you have stated that they are registered with the Registrar of News Papers of India, now please specify whether they are news papers he deposed that above three magazines are is like news paper because in that magazines all the information like policies, researches, current scenario of the industry, development of the industry are published.

On being asked about to specify further as to magazines named “Textile Review”, “Steam & Boiler Review” and “Indian Port & Infrastructure Review” are subject specific viz. “Textile Review”, deals with the topic textile, he replied in assertive and stated that it is deals with textile and allied topics.

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It has been informed that as per PRB Act, provisions - merely a registration with the Registrar of News Papers of India would not qualify a magazine or paper to be a news paper. It only entitles a registered papers to enjoy the benefit of Advertisement from the Government as can be seen from the magazine “Indian Port & Infrastructure Review” for the month of Feb, 2012, where on the second page (page next to the cover page) an advertisement of Gujarat Govt. appeared named “ Gujarat- A Model of development”. In reply thereto, he deposed that as per their view, they are registered with R.N.I. as periodicals publisher and their aim is not only to get advertisement from the industry or any other Govt., Semi Govt., Corporations and institutions, their magazines are regularly published even if we do not have any advertisement in the magazines.

This is to say that the Press and Registration of Books Act, 1867 and the rules made hereunder define newspapers as a printed periodical work containing public news or views on public news. Therefore, any publication which does not contain predominantly news and views on news, cannot be considered a newspaper, which also means any insertion of stray item of news does not qualify a publication to be called a newspaper. Newspapers are registered with RNI under the said Act but a mere registration with RNI does not automatically qualify them as newspapers. Registration is done at the instance of the intending publishers under two conditions (i) it should have a periodicity and (ii) it should be authenticated by the magistrate concerned where from the proposed publication shall be printed. A question therefore arises as to why publishers are willing to register their publications with RNI the reason is that registration under PRB Act, entitles them to get several concessions such as postal rebate, customs duty concession in terms of import of news print, import of machinery for modernizing printing press and seeking advertisement revenue from State and central Governments. Applying the above conditions on three periodicals published by M/s Saket Projects Ltd, it can be convincingly said that they are not news papers in spite of holding registration from RNI. On asking as to whether he is agreed or otherwise, in reply thereto he deposed that their periodicals might be not considered as news paper. But they would like to state that, their periodicals are not only for seeking advertisement from the Govt., or Industry and they say that they are not acting as advertisement agency anywhere in the magazines, they are publishing the magazine even if there is no advertisement received from any party, Govt. etc., so they are not an advertisement agency.

There may be instances when the magazines were published without having any advertisement in them. However, as and when the advertisements are received may be Govt. or of private party, the same are published by giving space in the magazine. On being asked as to whether it is true or not, he replied in assertive.”

9. Whereas from the above submissions of the service provider, it appears that they have provided other categories of taxable services namely: (1) Sale of Space or Time for Advertisement Service (2) Business Exhibition Service (3) Commercial training and Coaching Centre Service (4) Sponsorship Services.

10. Further, it appears from the financial books and records i.e. Balance sheets, various ledgers, debtors, debtors written off, technical literatures, their books and Magazines, website etc., wherein they indicated their role, activity, nature of services wherein the service provider categorically stated that:

i) M/s Saket Projects Limited is a multi-disciplinary company involved in creating interactive knowledge based platforms through various activities including publications, conferences as well as exhibitions. The company, over a period of time, has developed strategic strengths and core competencies in the areas of information enhancement and service sector. In the process, it has carved out a niche in the diverse areas of Event Management (Conferences & Exhibitions), Technical Publications and Energy Management multi-disciplinary company involved in creating interactive knowledge based platforms through various activities including publications, conferences as well as exhibitions since 2006;ii) They design and develop conferences & exhibitions aimed at specific target

audience. They have successfully organized events on diverse themes at prominent centers in the country with specialization in industry-specific events;iii) They publish three monthly magazines & special handbooks to provide latest,

precise and most authenticated information on the events taking shape on the industrial & economic landscape of the country.

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11. From the documents provided by the service providers, it transpired that they were providing services namely conferences, exhibitions and Event Management (Conference & Exhibition) in a close understanding of their clients' needs and priorities. They worked in partnership, and see clients and themselves as a team, they used to provide a high quality service and their aim was for excellence in the technical performance of the solutions which they provided by conducting “Event Management”. The participants were charged by way of Delegate Fees and also sponsor fees for having participated in the events so organized by them.

12. To translate the energy conservation ideas into realities, they claimed to have continuously innovated their approach & methodology and thereby contributed to the nation in saving the most precious input-Energy, by way of service providers experience and ability to look at the long term enabling them to continue developing their business with self confidence and energy. As a part of information enhancement on textiles sector as well as steam and boiler systems, SAKET organized conferences and exhibitions annually branded as TEXCELLENCE and STEAMTECH, respectively. Besides this, for spreading awareness about prudent management of energy, SAKET also organized conferences christened as SYNERGY WITH ENERGY and exhibition - INDIA ENERGY SHOW, annually, making it a brand equity event. WASTE MANAGEMENT, one of the major concerns on environment, driven by growing industrialization and urbanization. They also organized conference on INFRASTRUCTURE AND PORTS and FOOD SECURITY wherein they focused on accessibility and affordability of safe and healthy food, produced in an environmentally sound condition and was socially just in terms of distribution and pricing.

13. In the said service they were grossly doing the work of first planning as an event manager then promoting, and organizing trade fairs and exhibitions soliciting the participation from trade and industry and industry and provided space many times, provided seating accommodation means furniture, security, and at times through computer delivering lectures by expert delivering his views wherein the event in manner depending upon nature of event and including hiring hall to execute an event and collecting charges / entry fee as shown as “delegation fee” in their books and accounts. Their ledger of income entitles as “event management job”, which showed in their books and accounts as event income, wherein they have also reflected sponsorship income collected from various sponsors, product show, logo of other business entity in the name of sponsorship incomes in their books and accounts.

14. On further verification of the related bills and documents, it was noticed that the assessee (M/s Saket Projects Ltd.) had not charged any amount of service tax in their invoices from the clients/ service recipients. They had also not discharged the Service Tax liability on the incomes received under the different heads of income i. e. (1) Sale of Space or Time for Advertisement Service (2) Business Exhibition Service (3) Commercial training and Coaching Centre Service (4) Sponsorship Services. In this regards, the facts in respect of each of the service has been discussed hereinafter.

EVENT MANAGEMENT SERVICE & BUSINESS EXHIBITION SERVICES: 15. It is when an event is organized on behalf of a sponsor; services are termed as event

management services. Where a sponsor himself organizes trade fairs etc, no service tax is payable thereon under the head of Event Management. However, services of business exhibition have been brought under the net of service tax w. e. f. 10-09-2004 vide the Finance Bill, 2004. C. B. E. C. Circular No.96/7/2007-ST, dated 23-08-2007 speaks that:

“Trade fairs and exhibitions are organized by persons. Such organizers of trade fairs and exhibitions provide services to exhibitors in relation to business exhibitions. Services provided by an organizer of trade fair and exhibitions to an exhibitor in relation to business exhibitions is liable to service tax under the taxable services namely”: Business Exhibition Service.” i. e. Clause 65 (105) (zzo).

16. In addition, an organizer of trade fair and/ or business exhibition may engage an event manager to provide service to the organizer in relation to organizing trade fair or exhibition. In such cases, the event manager renders the service of Event Management to the organizers and liable to pay service tax under Event Management Service.

17. The two services namely: Business Exhibition Service & Event Management Service and the two service providers of the respective services are distinct.”

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18. Further, it is also a fact that Event manager is hired to execute an event and uses his expertise & ideas to manage an event. He is supposed to manage a venue, sets, including decoration of sets, mandap, chairs, tables, barricades, sound, light, video, electrical, security, communication, invitation to the event/ sale of tickets and publicity of an event. He also manages stage show, artist, musician, choreographer, and other misc. items for holding the event.

19. In the present case, so far the activities of the assessee are concerned, it has been observed that all the events like Seminars, conferences and business exhibitions are organized and/ or managed by different organizers including the assessee/sponsors themselves and hence service tax is payable by the assessee under the category of taxable services namely: Business Exhibition Services and not under the category of taxable services namely: Event Management Services, as event manager. However, on further inquiry it has been found that the service tax liability of the assessee also arises under the other categories of the following taxable services as discussed hereinafter.

20. The definition of taxable services namely: Event Management Service as per Section 65 (105) (zu) of the Finance Act, 1994 read Section 65 (40) of the Finance Act, 1994, is reproduced below:

65 (105) (zu): to any person, by an event manager in relation to event management.

65 (40): "event management" means any service provided in relation to planning, promotion, organizing or presentation of any arts, entertainment, business, sports, marriage or any other event and includes any consultation provided in this regard;

21. The definition of taxable services namely: Business Exhibition Service as per Section 65 (105) (zzo) of the Finance Act, 1994 read with Section 65 (19a) of the Finance Act, 1994 and, is reproduced below:

65 (105) (zzo): to an exhibitor, by the organisor of business exhibition, in relation to business exhibition;

65 (19a): “business exhibition” means an exhibition, —

(a) to market; or

(b) to promote; or

(c) to advertise; or

(d) to showcase,

any product or service, intended for the growth in business of the producer or provider of such product or service, as the case may be.

22. In view of the above, it was observed that services provided/ rendered in relation to a circular, label, documents, hoardings or any other audio visual representation of a product or service falls under advertisement services. However, the services relating to actual exhibition or display of products or services would fall under the category of taxable services namely: Business Exhibition Services.

23. In this regards, instructions issued vide C.B.E.C. Circulars no.80/10/2004-ST, dated 17-09-04 also are relevant.

4.1 Business exhibition service is a service rendered to an exhibitor by an organizer of a business exhibition that intends to market, promote, advertise or show case products or services for growth in business of the producers or providers of such products or services. Thus, organizers of events such as trade fairs, road shows, fashion shows, display show-cases kept in airports, railway stations, hotels etc. would be covered under this new levy. A display of consumer goods in shops or shopping centers for customers to select and purchase would normally not attract any service tax, as normally no separate charges are collected by the shop-keepers for displaying such goods. However, in case an amount is collected for merely displaying an item, the same would be chargeable to service tax.

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4.2 While event management service (a currently taxable service) also relates to organizing such events, but in that case, the services are rendered to the organizer by an event manager in relation to planning, promoting, organizing etc. Thus, an organizer of a business exhibition is not covered under Event Management Services, but would be covered under the new levy of ''Business Exhibition Services''. Similarly, while services rendered in relation to a circular, label, documents, hoardings or any other audio visual representation of a product or service falls under ''advertisement services'', the services relating to actual exhibition or display of the product or services would fall under the category of ''Business Exhibition Services''.

Sale of Space or Time for Advertisement Service:

24. The definition of taxable services namely: Sale of Space or Time for Advertisement Service as per Section 65 (105) (zzzm), is reproduced below:

(zzzm) to any person, by any other person, in relation to sale of space or time for advertisement, in any manner; but does not include sale of space for advertisement in print media and sale of time slots by a broadcasting agency or organisation.

Explanation 1.—For the purposes of this sub-clause, “sale of space or time for advertisement” includes,—

(i) providing space or time, as the case may be, for display, advertising, showcasing of any product or service in video programmes, television programmes or motion pictures or music albums, or on billboards, public places, buildings, conveyances, cell phones, automated teller machines, internet;

(ii) selling of time slots on radio or television by a person, other than a broadcasting agency or organization; and

(iii) aerial advertising.

Explanation 2.—For the purposes of this sub-clause, ‘‘print media’’ means,—

(i) ‘‘newspaper’’ as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867;

(ii) ‘‘book’’ as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867, but does not include business directories, yellow pages and trade catalogues which are primarily meant for commercial purposes;]

25. However, with effect from: 01-06-2007, the Finance Act, 2007 has amended definition of the term “Book” so as to specifically exclude business directories, yellow pages and trade catalogues, which are primarily meant for commercial purposes from the scope (prior to 01-06-2007, these were not so excluded). Consequently, sale of space for advertisement in such publications will also be leviable to service tax under the category of taxable services namely: “Sale of Space & Time for Advertisement Service”.

26. In the present case, the assessee has provided such taxable services namely: “Sale of Space & Time for Advertisement Service” by way of providing space for advertisements about the products and/ or services by showcasing/ displaying/ advertising of products or services of their clients/ customers in their exhibitions and conferences which have been organized at the public places and/ or buildings. Besides this, they have also carried out the above stated/ the same activities by way of publishing the advertisements about the products and/ or services of their clients/ customers in their magazines published from time to time for various commercial purposes. Therefore, in view of the above facts, they have also provided taxable services namely: “Sale of Space or Time for Advertisement Services”.

27. On further verification of the related bills/ invoices and documents, it was also noticed that the assessee (M/s Saket Projects Ltd.) had not discharged the Service Tax liability on the incomes received under the head of "income from the publication" On verification of the invoices and related documents, it was found that the said assessee had not discharged the service Tax liability on the basis of the exemption under Para 2 of the Circular No.64/13/2003-

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ST, dated 28.10.2003 issued by the Government of India, Ministry of Finance, Department of Revenue.

28. The exemption under Circular No. 64/13/2003-ST, dated 28.10.2003 is not allowed in this case because it is restricted only to space selling where the agency undertake the job of merely bringing the order for advertisement and does not under take any further activity. But in the present case assessee was canvassing for space providing certain value added service to the client, such value added services may include receiving the text, contents, estimating space, negotiating prices, advice about general layout and timing etc. In such cases, there is clearly an element of "creative" service provided to the client and hence such services would be taxable under the category of "Sale of Space or Time for Advertisement Service" which was introduced with effective from 01.05.2006. In the said taxable services, all activities of selling of space or time for the purpose of advertisement, excluding sale of space for advertisement in print media. However, the intention was not to exclude the commercial print media, as per the Para 3 (9) of CBEC instruction letter File No. 334/4/2006-TR, dated 28-2-2006. In the said Circular, it has been stated that “advertisement in print media is excluded from service tax providing merely printing of the text supplied by the customer that is also only in news paper & book which are meant for non commercial purpose. Further in order to rope in more service providers, the definition of print media is amended to exclude business directory, yellow pages and trade catalogues which are primarily meant for commercial purpose from the scope vide Para 7 (1) of circular no. D.O. F. No.334/1/2007-TRU, dated 28.02.2007.

Commercial training and Coaching Centre Service:

29. The definition of taxable services namely: Commercial Training and Coaching Service as per Section 65 (105) (zzc) of the Finance Act, 1994 read with Section 65 (26) and 65 (27), is reproduced below:

(zzc) to any person, by a commercial training or coaching centre in relation to commercial training or coaching;

[Explanation.—For the removal of doubts, it is hereby declared that the expression “commercial training or coaching centre” occurring in this sub-clause and in clauses (26), (27) and (90a) shall include any centre or institute, by whatever name called, where training or coaching is imparted for consideration, whether or not such centre or institute is registered as a trust or a society or similar other organisation under any law for the time being in force and carrying on its activity with or without profit motive and the expression “commercial training or coaching” shall be construed accordingly;

(26) "commercial training or coaching" means any training or coaching provided by a commercial training or coaching centre;

(27) "commercial training or coaching centre" means any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field other than the sports, with or without issuance of a certificate and includes coaching or tutorial

classes but does not include preschool coaching and training centre or any institute or establishment which issues any certificate or diploma or degree or any educational qualification recognized by law for the time being in force;

30. In the present case, the assessee provides the services of commercial training and coaching in their various seminars, while organizing different types of conferences and exhibitions. Therefore, in view of the above, such activities are well covered under the taxable services namely: Commercial Training and Coaching Services. According to the above definition, a service becomes taxable as service of Commercial Training or Coaching Service for the following reasons:

(i) The service is in relation to commercial training or coaching.(ii) The service of training and coaching is provided to their clients/ customers by the

assessee for consideration (which includes cash too), as the participants and delegates attending the conferences/ seminars/ exhibitions have made payments to the assessee as delegation fee and participation charges.

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(iii) The training/ coaching imparted by the assessee includes skill, knowledge, lessons and almost every kind of imparting of information on various subjects related to commerce and industry. Hence it is well covered under the definition of taxable services.

(iv) Any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field with or without the issuance of a certificate is commercial training or coaching centre.

31. It appeared from the financial books and records i.e. Balance sheets, various ledgers, Debtors, debtors written off, technical literatures, their books and Magazines, website etc. wherein they indicated their role, activity, nature of services and stated that The Company, in 2006, launched a periodicals like (1) TEXTILE REVIEW (monthly), (2) STEAM & BOILER REVIEW (bilingual magazine), (3) INDIAN PORTS & INFRASTRUCTURE MAGAZINE. In all such magazines, the assessee was providing latest, precise and most authenticated information on the events taking shape on the industrial/economic landscape of the country, with this objective, editorial-mix of the magazine is conceived in form of a news capsule so that, it meets with the expectations of its readership. The magazine, therefore, are conceived as niche magazine all are related to the corporate and commercial nature.

Sponsorship Services:

32. The definition of taxable services namely: Sponsorship Service as per Section 65 (105) (zzzn) of the Finance Act, 1994 read with Section 65 (99a), is reproduced below:

(zzzn) to any person, by any other person receiving sponsorship, in relation to such sponsorship, in any manner;

(99a) “sponsorship” includes naming an event after the sponsor, displaying the sponsor’s company logo or trading name, giving the sponsor exclusive or priority booking rights, sponsoring prizes or trophies for competition; but does not include any financial or other support in the form of donations or gifts, given by the donors subject to the condition that the service provider is under no obligation to provide anything in return to such donors

33. In the present case, the assessee had organized business exhibitions, conference, seminars etc. and considered the requests of their clients for sponsorship on receipt of payments from them against their activities like displaying the sponsor’s company logo or trading name, giving the sponsor exclusive or priority booking rights, sponsoring prizes or trophies for competition. However, the assessee as a service provider was under no obligation to provide anything in return to such donors for such services provided to their sponsors.

34. However, it has been observed after verification of the some of the invoices in respect of their claim as Sponsorship Service provided by the assessee that:

(1) The details as shown in Invoice No.111, dated 01-11-2007 (F. Y. 2007-08) for Rs.4,00,000/- issued by the assessee in favor of M/s Sadbhav Engineering Limited, Sadbhav House, Opp. Law Garden Police Chowky, Ellisbridge, Ahmedabad is as under:

“Being the charges towards participation in the seminar of Risk Management & Effective Implementation of Construction Projects held at Bhaikaka Bhavan, Law Garden, Ahmedabad on 6-7th October, 2007”

It means that such services as mentioned in the above invoice pertains to Commercial Training & Coaching Services and not pertains to Sponsorship Services as claimed by the assessee.

(2) The details as shown in Invoice No.TR-016, dated 25-08-2008 (F. Y. 2008-09) for Rs.9,50,000/- issued by the assessee in favor of M/s Torrent Power Limited, Electricity House, Lal Darwaja, Ahmedabad is as under:

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“Advertisement: Full page Colour (Eighteen issues @ Rs.75,000/- per issue)”,

Publication: Textile Review

Issue: October, 2008 to March, 2010: Rs.13,50,000/-

Less: Special Discount: Rs. 4,00,000/-

Invoice amount: Rs.9,50,000/-

It means that such services as mentioned in the above invoice pertains to Sale of Space and Time for Advertisement Services and not pertains to Sponsorship Services as claimed by the assessee.

(3) The details as shown in Invoice No.E/2020/6, dated 20-12-2010 (F. Y. 2010-11) for Rs.1,00,000/- issued by the assessee in favor of M/s Suzlon Energy Limited, Shrimali Society, Behind Shri Krisahna Centre, Navrangpura, Ahmedabad is as under:

“Advertisement: Two Full Page Four Colour”,

Publication: Energy India

It means that such services as mentioned in the above invoice pertains to Sale of Space and Time for Advertisement Services and not pertains to Sponsorship Services as claimed by the assessee.

(4) The details as shown in Invoice No.109, dated 01-11-2007 (F. Y. 2007-08) for Rs.2,50,000/- issued by the assessee in favor of M/s Ranjit Buildcon Limited, Ranjeet House, Opp. Subn Residency, Behind Bhagwat Bungalow, Thaltej, Ahmedabad is as under:

“Being the charges towards participation in the seminar of Risk Management & Effective Implementation of Construction Projects held at Bhaikaka Bhavan, Law Garden, Ahmedabad on 6-7th October, 2007”

It means that such services as mentioned in the above invoice pertains to Commercial Training & Coaching Services and not pertains to Sponsorship Services as claimed by the assessee.

35. In this regards, a statement of Shri Kapil Bokadia, Senior Manager (Taxation) of M/s Sadbhav Engineering Ltd., Ahmedabad was recorded on 24-08-2012 under Section 14 of the Central Excise Act, 1994 as made applicable to service tax matter under Section 83 of the Finance Act, 1994, wherein he interalia deposed that:

“On being asked I state that our company has made payment of advertisement charges to the service provider namely: M/s Saket Projects Limited, Saket House, 1, Panchsheel, Usmanpura, Ahmedabad as per details furnished hereunder during the financial year: 2007-08 to 2010-11:

(i) Cheque no.276430, dated 21-09-2007 for Rs.1,00,000/-(ii) Cheque no.276535, dated 05-10-2007 for Rs.3,00,000/-

I hereby depose that the above stated payment has been made by our company towards participation in the seminar on risk management & Effective Implementation of Construction Projects held on 6th & 7th October, 2007. In this respect I also enclose herewith a copy of the Invoice no.111, dated 01-11-2007 issued by M/s Saket Projects Limited, Saket House, 1, Panchsheel, Usmanpura, Ahmedabad for an amount of Rs.4,00,000/-. Further, I also depose that we both the parties have not entered in to any written agreement/ contract since 2007 till date for any transaction whatsoever and we have not made any written memorandum of understanding for any payment made to them. I also depose that our company did not enter into any sponsorship

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arrangement with them and hence question of payment of service tax on such payment of Rs.4,00,000/- made by us does not arise at all in view of the provisions of Rule 2 (1) (d) (viii) of the Service Tax Rules, 1994 as a recipient of taxable services.”

36. M/s Torrent Power Limited, Ahmedabad have also furnished vide their letter dated 24-08-2012 the relevant documents showing that out of 3 (three) invoices, 2 (two) invoices pertains to Advertisement service and not sponsorship service as can be observed from the details thereof as mentioned below:

(i) Invoice no.TR-016, dated 25-08-2008 for Rs.9,50,000: Advertisement: Full Page Colour: Textile Review

(ii) Invoice no.S&B-005, dated 25-08-2008 for Rs.9,50,000: Advertisement: Full Page Colour: Steam & Boiler Review

37. M/s Suzlon Energy Ltd., Ahmedabad have also furnished vide their letter dated 24-08-2012 the relevant documents showing that out of 4 (four) invoices, 1 (two) invoice pertains to Advertisement service and not sponsorship service as can be observed from the details thereof as mentioned below:

Invoice no.E-2020/6, dated 20-12-2010 for Rs.1,00,000: Advertisement: Full Page Colour: Energy India 2020

They have also informed vide the above referred letter that as per Rule 2 (1) (d) (vii) of Service Tax Rules, 1994, they are not required to pay service tax, as a recipients of taxable service for such advertisement service.

38. In this regards, a statement of Shri Ripal Manubhai Patel, Accountant and authorized person of M/s Ranjit Buildcon Ltd., Ahmedabad was recorded on 10-09-2012 under Section 14 of the Central Excise Act, 1994 as made applicable to service tax matter under Section 83 of the Finance Act, 1994, wherein he interalia deposed that:

“I have been shown the Invoice no.109, dated 01-11-2007 issued by M/s Saket Projects Limited, Saket House, 1, Panchsheel, Usmanpura, Ahmedabad in favor of M/s Ranjit Buildcon Ltd., Ahmedabad and in token thereof I have signed on the body of the said invoice. On being asked I state that our company has made payment of advertisement charges to the service provider namely: M/s Saket Projects Limited, Saket House, 1, Panchsheel, Usmanpura, Ahmedabad as per details furnished hereunder during the financial year: 2007-08 to 2010-11:

(i) Cheque no.263213, dated 28-09-2007 for Rs.2,00,000/-(ii) Cheque no.263226, dated 05-10-2007 for Rs.50,000/-

I hereby depose that the above stated payment has been made by our company towards participation in the seminar on Risk management & Effective Implementation of Construction Projects held on 6th & 7th October, 2007.

The Invoice No.109, dated 01/11/2007 of M/s Saket Projects Ltd., Ahmedabad clearly shows that the payment on all-inclusive base has been made towards the advertisement of our company’s name and business and no separate consideration had flown from our company except what has been stated in the ledger, a copy thereof is already given vide our letter dated 20-08-2012 to your office. Further, I also depose that we both the parties have not entered in to any written agreement/ contract since 2007 till date for any transaction whatsoever and we have not made any written memorandum of understanding for any payment made to them. I also depose that the said expenses of advertisement was subjected to TDS under Section 194C with regard to payments for advertisements only.

I also depose that our company did not enter into any sponsorship arrangement with them and hence question of payment of service tax on such payment of Rs.2,50,000/- made by us does not arise at all in view of the provisions of Rule 2 (1) (d) (viii) of the Service Tax Rules, 1994 as a recipient of taxable services.”

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39. On verification of invoices/ ledger entries/ statements and documents submitted by various service receivers, it was noticed that the assessee had wrongly classified their service as “Sponsorship Service” in some of the cases and not paid appropriate service tax on actual service provided by them. It was noticed that they have wrongly classified their service under Sponsorship Service during the F. Y. 2007-08 to 2010-11 in some of the cases and such services were actually either (1) Sale of Space or Time for Advertisement Service or (2) Commercial Training or Coaching Service or (3) Business Exhibition Service. The assessee had also wrongly claimed services in respect of some of the invoices as “Sponsorship Service” in their statement/ worksheet; however on perusal of the relevant invoices, it was mentioned as “Advertisement Service” or “Participation fees/ delegation fees” or “Stall charges”. The said mis-declaration/ mis-statement amounts to Rs.28,78,000/- (Rs.25,20,000/- + Rs.1,50,000/- + Rs.1,50,000/- + Rs.58,000/-) as per details given hereunder:

As per verification of Invoices/ Ledger and not considerable as Sponsorship Service as per party’s claim

Taxable service 2007-08 2008-09 2009-10 2010-11

Sale of Space of Time for Advertisement Services

60,000 -- -- 28,000

Commercial Training & Coaching Services

20,30,000 -- 1,50,000 30,000

Business Exhibition Service 4,30,000 1,50,000 -- --

TOTAL: 25,20,000 1,50,000 1,50,000 58,000

40. The assessee had also wrongly claimed services in respect of some of the invoices as “Sponsorship Service” in their statement/ worksheet; however on perusal of the relevant invoices when compared with relevant ledgers, it was mentioned as “Advertisement Service” or “Participation fees/ delegation fees” or “Stall charges”. The said mis-declaration/ mis-statement amounts to Rs.3,93,709/- (Rs.1,20,000/- + Rs.28,325/- + Rs.1,27,705/- + Rs.1,17,679/-) as per details given hereunder:

As per verification of Invoices/ Ledger and not taken in to consideration by the party while furnishing information

Taxable service 2007-08 2008-09 2009-10 2010-11

Sale of Space of Time for Advertisement Services

-- 28,325 1,27,705 1,17,679

Commercial Training & Coaching Services

-- -- -- --

Business Exhibition Service 1,20,000 -- -- --

TOTAL: 1,20,000 28,325 1,27,705 1,17,679

41. The assessee deposed in their statement recorded on 28-07-2012 that so far Sponsorship Services are concerned, the service recipients are required to discharge their service tax liability in view of the provisions of Rule 2 (1) (d) (vii) of the Service Tax Rules, 1994 and hence they have not made payment of service tax in respect of such sponsorship services. However, in case of description as shown in some of the invoices issued by the assessee as discussed hereinabove in previous para, it has been observed that they are liable to discharge service tax liability as a service provider either under the category of taxable service namely: “Commercial Training & Coaching Service” or “Sale of Space or Time for Advertisement Service”, as the case may be. After detailed verification of the above facts, service tax liability of the assessee in respect of different categories of taxable services has been calculated as per Annexure: I to III attached to this show cause notice.

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42. Thus, it appeared that the Service Provider was providing different taxable services under various categories but they have not paid service tax on the gross amount collected from their clients/ customers under the taxable services as discussed in foregoing paras. Such amount collected as a consideration towards providing the said taxable services has also not been fully declared/ reflected in their ST-3 returns filed by them as a assessee at the relevant time with the Service Tax department.

43. From the above and as per their Ledger/Balance Sheet/ statement dated 23.03.2012 furnished by service provider, it appeared that the service provider has not filed any ST-3 Returns for providing taxable service of (1) Sale of Space or Time for Advertisement Service (2) Business Exhibition Service (3) Commercial training and Coaching Centre Service (4) Sponsorship Services for the F.Y. 2007-08 to 2010-11 on which Service Tax at the appropriate rate prevalent during the concerned period works out to Rs.33,98,696/- as shown in Reconciliation statement Annexure-A attached to this show cause notice. In view of the facts the said service provider had evaded service tax amounting to Rs.33,98,696/- as calculated above.

44. Thus, as per above the stand taken by the said assessee for non-payment of service tax appears non-maintainable making the service provider liable for paying service tax on different types of taxable services namely: (1) Sale of Space or Time for Advertisement Service (2) Business Exhibition Service (3) Commercial training and Coaching Centre Service (4) Sponsorship Services.

45. It is provided under Section 68(1) of the act that ‘every person providing taxable service to any person shall pay service tax at the rate specified in section 66 in such manner and within such period as may be prescribed.’ The manner and period of payment prescribed under Rule 6 of the Service Tax Rules, 1994. In the instant case the said service provider has not paid service tax of total Service Tax of Rs.33,98,696/- (S.T.: Rs.32,99,700/- + Education Cess: Rs.65,998/- + Higher Education Cess: Rs.32,998/-) and thereby violated the provisions of Section 68(1) read with Rule 6 of the Service Tax Rules, 1994.

46. Whereas, as per Section 70 of the Finance Act, 1994 every person liable to pay service tax is required to himself assess the tax due on the services provided by him and thereafter furnish a return to the jurisdictional Superintendent of service tax by disclosing wholly & truly all materials facts in ST-3 returns. Whereas the said assessee had not disclosed full, true and correct information about the value of the service provided by them. Thus, it appeared that there is a deliberate withholding of essential and material information from the department about service provided and value realized by them. It appeared that all these material information had been concealed from the department deliberately, consciously and purposefully to evade payment of service tax. Therefore, in this case all essential ingredients existed to invoke the extended period in terms of Section 73(1) of Finance Act, 1994 to demand the Service Tax short paid.

47. It also appeared that the said assessee had contravened the provisions of Section 68 of the said Act in as much as they had failed to pay service tax at the rate specified under Section 66 of the said Act and thereby rendered themselves liable for penalty under section 76, 77 & 78 of the said act.

48. The said assessee was also liable to pay interest at the appropriate rates for the period from due date of payment of Service Tax till the date of actual payment as per the provisions of Section 75 of the Finance Act, 1994.

49. From the evidence, it appeared that the said assessee had not taken into account all the incomes received by them for rendering taxable services for the purpose of payment of service tax and thereby sought to minimize their tax liability. The deliberate efforts to mis-declared the value of taxable service in ST-3 returns and not paying the correct amount of service tax in utter disregard to the requirements of law and breach of trust deposed on them such outright act in defiance of law appeared to have rendered them liable for stringent penal action as per the provisions of Section 78 of Finance Act 1994 for suppression or concealment or furnishing inaccurate value of taxable service with intent to evade payment of service tax.

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50. The Government has from the very beginning placed full trust on the service provider so far service tax is concerned and accordingly measures like Self assessments etc., based on mutual trust and confidence are in place. Further, a taxable service provider is not required to maintain any statutory or separate records under the provisions of Service Tax Rules as considerable amount of trust is placed on the service provider and private records maintained by him for normal business purpose are accepted, practically for all the purpose of Service Tax. All these operate on the basis of honesty of the service provider; therefore, the governing statutory provisions create an absolute liability when any provision is contravened or there is a breach of trust placed on the service provider. From the evidence, it appeared that M/s Saket Projects Ltd., Ahmedabad has deliberately not discharged their Service Tax liability. The deliberate efforts in not paying the correct amount of service tax are utter disregard to the requirements of law and constitute a breach of trust deposed on them. Such outright act in defiance of law appears to have rendered them liable for stringent penal action as per the provisions of Section 78 of Finance Act, 1994 for suppression or concealment or furnishing inaccurate value of taxable service with intent to evade payment of service tax. Thus, all the above acts of contravention on the part of M/s Saket Projects Ltd., Ahmedabad appeared to have been committed by way of suppression of facts with an intend to evade payment of service tax and, therefore, the said service tax not paid was required to be demanded and recovered from them under the proviso to Section 73 (1) of the Finance Act, 1994 by invoking extended period of five years. All these acts of contravention of the provisions of Section 68, Section 69 and Section 70 of the Finance Act, 1994 read with Rule 4, Rule 6 and Rule 7 of the Service Tax Rules, 1994 are punishable under the provisions of Section 76, Section 77 and Section 78 of the Finance Act, 1994 as amended time to time.

51. It is provided under Section 70 of the act that ‘every person liable to pay the service tax shall himself assess the tax due on the service provided by them and shall furnish to the Superintendent of Central Excise, a return in such form and in such manner and as such frequency’. The form, manner frequency are prescribed in Rule 7 of the Service Tax Rules, 1994.

52. In the instant case the said service provider had not assessed the tax due on the taxable service namely: Sale of Space or Time for Advertisement Service provided by them and not paid the service tax of total Service Tax of Rs.12,98,325/- (S.T.: Rs.12,60,507/- + Education Cess: Rs.25,212/- + Higher Education Cess: Rs.12,606-) during the F. Y. 2007-08 to 2010-11 and thereby violated the provisions of Section 70 of the act and Rule 7 of the Service Tax Rules, 1994 along with Section 75 of the Finance Act, 1994. The details thereof have been furnished hereunder:

Financial Year

Taxable value

(A-I to A-IV)

Rate of Service tax

Service Tax

Education Cess @2%

Higher Secondary Education Cess: @1%

Total Service Tax (Rs.)

2007-08 8,90,300 12% 1,06,836 2,137 1,068 1,10,041

2008-09 32,01,875 12% 3,84,225 7,685 3,843 3,95,753

2009-10 28,60,778 10% 2,86,078 5,722 2,861 2,94,661

2010-11 48,33,678 10% 4,83,368 9,668 4,834 4,97,870

Total: 1,17,86,631 12,60,507 25,212 12,606 12,98,325

53. Like-wise, they had also not assessed the tax due on the taxable service namely: Commercial Training or Coaching Service provided by them and not paid the service tax of total Service Tax of Rs.14,16,738/- (S.T.: Rs.13,57,473/- + Education Cess: Rs.27,511/- + Higher Education Cess: Rs.13,754-) during the F. Y. 2007-08 to 2010-11 and thereby violated the provisions of Section 70 of the act and Rule 7 of the Service Tax Rules, 1994 along with Section 75 of the Finance Act, 1994. The details thereof have been furnished hereunder:

Financial Year

Taxable value (B-I to B-III)

Rate of Service

tax

Service Tax

Education Cess @2%

Higher Secondary Education Cess: @1%

Total Service Tax

(Rs.)

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2007-08 30,64,480 12% 3,67,738 7,355 3,677 3,78,770

2008-09 24,33,550 12% 2,92,026 5,841 2,920 3,00,787

2009-10 42,89,840 10% 4,28,984 8,580 4,290 4,41,854

2010-11 28,67,250 10% 2,86,725 5,735 2,867. 2,95,327

Total: 1,26,55,120 13,75,473 27,511 13,754 14,16,738

54. Like-wise, they had also not assessed the tax due on the taxable service namely: Business Exhibition Service provided by them and not paid the service tax of total Service Tax of Rs.6,83,633/- (S.T.: Rs.6,63,720/- + Education Cess: Rs.13,275/- + Higher Education Cess: Rs.6,638/-) during the F. Y. 2007-08 to 2010-11 and thereby violated the provisions of Section 70 of the act and Rule 7 of the Service Tax Rules, 1994 along with Section 75 of the Finance Act, 1994. The details thereof have been furnished hereunder:

Financial Year

Taxable value (C-I to C-

II)

Rate of Service tax

Service Tax Education Cess @2%

Higher Secondary Education Cess: @1%

Total Service Tax

(Rs.)

2007-08 34,54,000 12% 4,14,480 8,290 4,145 4,26,915

2008-09 5,07,000 12% 60,840 1,217 608 62,665

2009-10 11,19,500 10% 1,11,950 2,239 1,120 1,15,309

2010-11 7,64,500 10% 76,450 1,529 765 78,744

Total: 58,45,000 6,63,720 13,275 6,638 6,83,633

55. In view of the above, it appeared that the said assessee had contravened the provisions of Section 68 & 70 of the Act, and Rule 6 & 7 of the Service Tax Rules, 1994. All the contraventions and violations made by the said assessee appeared to have rendered themselves liable to penalty under Section 76, 77 and 78 of the act and the total Service Tax of Rs.33,98,696/- (S.T.: Rs.32,99,700/- + Education Cess: Rs.65,998/- + Higher Education Cess: Rs.32,998/-) is recoverable under Section 73 of the act. The details thereof have been furnished hereunder:

Taxable Services Service Tax

Education Cess @2%

Higher Secondary Education Cess: @1%

Total Service Tax

(Rs.)

Sale of Space or Time for Advertisement Service

12,60,507 25,212 12,606 12,98,325

Commercial Training or Coaching Service

13,75,473 27,511 13,754 14,16,738

Business Exhibition Service 6,63,720 13,275 6,638 6,83,633

Total: 32,99,700 65,998 32,998 33,98,696

56. In view of the above discussion and reply of the said service provider, it appeared that the said service provider was very well aware of the service tax law and hence intentionally evaded the service tax by suppressing the actual activities carried out by them. All the contraventions, as

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discussed above, made by the said service provider are punishable under Section 76, 77 & 78 of the act and the Service Tax amounting to Rs.33,98,696/- (S.T.: Rs.32,99,700/- + Education Cess: Rs.65,998/- + Higher Education Cess: Rs.32,998/-) recoverable under the provisions of Section 73 (1) of the Finance Act, 1994. Also the said service provider had willfully suppressed the activities carried out by them, proviso to Section 73 (1) in respect of larger period, was also invokable beyond doubt.

57. Now, therefore, M/s. Saket Projects Ltd. Ahmedabad was issued a show cause notice no. STC/4-23/O&A/ADC/AE/2012 dated 08.10.2012 by the Additional Commissioner of Service Tax, Ahmedabad as to why:

(i) Services provided/ rendered by them in respect of advertisement in their magazines/ publications/ books/ periodicals should not be considered as taxable service under the category of Sale of Space or Time for Advertisement Service as specified in clause (zzzm) of Section 65 (105) of the Finance Act, 1994 as amended and an amount of Rs.1,17,86,631 (as per Annexure: I attached to this show cause notice) received by them towards providing/ rendering the above stated services should not be considered as taxable value under the said category of taxable service and Service Tax amounting to Rs.12,98,325/- (S.T.: Rs.12,60,507/- + Education Cess:Rs.25,212/- + Higher Education Cess:Rs.12,606-) as discussed in foregoing paras during the F. Y. 2007-08 to 2010-11 should not be demanded and recovered from them under proviso to Section 73 (1) of the Finance Act, 1994, by invoking larger period of five years as discussed hereinabove (Annexure: I to this show cause notice).

(ii) Services provided/ rendered by them in respect of Participation fees/ delegation fees received for their seminars/ conferences should not be considered as taxable service under the category of Commercial Training & Coaching Service as specified in clause (zzc) of Section 65 (105) of the Finance Act, 1994 as amended and an amount of Rs.1,26,55,120/- (as per Annexure: II attached to this show cause notice) received by them towards providing/ rendering the above stated services should not be considered as taxable value under the said category of taxable service and Service Tax amounting to Rs.14,16,738/- (S.T.: Rs.13,57,473/- + Education Cess:Rs.27,511/- + Higher Education Cess:Rs.13,754-) as discussed in foregoing paras during the F. Y. 2007-08 to 2010-11 should not be demanded and recovered from them under proviso to Section 73 (1) of the Finance Act, 1994, by invoking larger period of five years as discussed hereinabove (Annexure: II to this show cause notice).

(iii) Services provided/ rendered by them in respect of Stall charges/ stall fees received for their exhibitions should not be considered as taxable service under the category of Business Exhibition Service as specified in clause (zzo) of Section 65 (105) of the Finance Act, 1994 as amended and an amount of Rs. 58,45,000/- (as per Annexure: III attached to this show cause notice) received by them towards providing/ rendering the above stated services should not be considered as taxable value under the said category of taxable service and Service Tax amounting to Rs.6,83,633/- (S.T.: Rs.6,63,720/- + Education Cess: Rs.13,275/- + Higher Education Cess: Rs.6,638/-) as discussed in foregoing paras during the F. Y. 2007-08 to 2010-11 should not be demanded and recovered from them under proviso to Section 73 (1) of the Finance Act, 1994, by invoking larger period of five years as discussed hereinabove (Annexure: III to this show cause notice).

(iv) Interest, at appropriate rate, should not be charged upon them under section 75 of the Finance Act 1994.

(v) Penalty should not be imposed upon them under Section 76 of the Finance Act 1994, for contravention of Section 68(1) of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994.

(vi) penalty under section 77 of the Finance Act 1994 should not be imposed upon them for the contravention of Section 69 of the Finance Act, 1994, (a) for failing to take

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registration for other taxable services in accordance with the said provisions or rules made there under (b) for failure to keep, maintain books of accounts and other documents as required under the provisions of the Finance Act, 1994 or rules made there under (c) for failure to self assess the tax due on the services provided by him.

(vii) penalty under section 78 of the Finance Act 1994 as amended should not be imposed upon them for the suppressing the taxable value of taxable services provided by them before the department with intent to evade the payment of service tax.

DEFENCE REPLY

58. M/s Saket Projects Limited filed a written reply dated 17.04.2013, in which they stated as under :

59. That the SCN has alleged that the publication of advertisement in their various publications amounts to rendering of service of sale of space or time for advertisement under section 65 (105) (zzzm) and are liable to service tax. This allegation is not acceptable to them. The provision is reproduced hereunder for reference. 65(105)(zzzm)

“taxable service” means any [service provided or to be provided], to any person, by any other person, in relation to sale of space or time for advertisement, in any manner; but does not include sale of space for advertisement in print media and sale of time slots by a broadcasting agency or organization.

Explanation 1. – For the purposes of this sub-clause, “sale of space or time for advertisement” includes,-

(i) Providing space or time, as the case may be, for display, advertising, showcasing of any product or service in video programmes, television programmes or motion pictures or music albums, or on billboards, public places, buildings, conveyances, cell phones, automated teller machines, internet;

(ii) Selling of time slots on radio or television by a person, other than a broadcasting agency or organization; and

(iii) Aerial advertising

[Explanation 2,- For the purposes of this sub-clause, “print media” means, -

(i) “Newspaper” as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867 (25 of 1867);

(ii) “book” as defined in sub-section (1) of the Press and Registration of Books Act, 1867 (25 of 1867), but does not include business directories, yellow pages and trade catalogues which are primarily meant for commercial purposes;]”

60. That they submit that perusal of the aforesaid provisions shows that the essential ingredient for an activity to come within the ambit of being it taxable service is the provision of any service ‘in relation to’ sale of space or time for the advertisement. Therefore, it is clear that the activity of sale of space for advertisement by itself cannot be an activity which is liable to tax. It is also seen from SCN that the Noticee is allegedly providing service in relation to sale of space. The entire focus of the said Notice is restricted to a charge that the actual sale of space by the Noticee amounts to a taxable service, which is exfacie, untenable and based on a complete misreading of section 65 (105) (zzzm). It is submitted that the phrase ‘in relation to’ has been judicially interpreted to mean ‘something in connection with main activity’. In this regard, observations from the following judgments are relevant and relied upon by the Noticee. …….

It is therefore apparent that sale of space for advertisement in various magazine published by the Noticee can not the considered as taxable service.

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61. Without prejudice to the contention that the said provision does not apply to the activity under taken by the Noticee, it was submitted that ion a co joint reading of Explanation 1 with section 65 (105) (zzzm), it is apparent that the clause ‘sale of space or time for advertisement’ includes providing space for such advertisement. Consequently, a taxable service under section 65 (105) (zzzm) is a service which is in relation to providing space for advertisement and not the very providing of such space. It is an admitted position that the Noticee is itself the publisher of the magazines and the activity undertaken by the Noticee is simplicitor the providing of space. The Noticee, admittedly, does not undertake any activity in relation to providing such space.

62. It was submitted that the section 65(105)(zzzm) provides exclusion of “taxable service” from the main clause. This can be seen from the provision itself that ‘taxable service’ “does not include sale of space for advertisement in print media”. It is clarified that this clause clearly provides that if the sale of space for advertisement is in print media, then service gets exclusion from levy of service tax. Therefore, the revenue has to prove that sale of space for advertisement is not in print media and the Noticee has to prove it otherwise and show that such sale of space for advertisement is in fact in print media only. The term “print media” is also clarified in the Explanation-2(ii) of the said section65(105)(zzzm) itself which shows that “print media” means, - “book” as defined in sub-section (1) of the Press and Registration of Books Act, 1867 (25 of 1867), but does not include business directories, yellow pages and trade catalogues which are primarily meant for commercial purposes.

63. Similarly the term “book” also as defined in sub-section (1) of the Press and Registration of Books Act, 1867 is to be taken for interpretation of this provision. According to this provision [copy enclosed], "Book" includes every volume, part of division of a volume, and pamphlet, in any language, and every sheet of music, map, chart of plan separately printed. Thus, the activity of Noticee in such sale of space for advertisement is in fact in print media only, which is excluded from the levy of service tax. Copies of relevant “Books”, wherein Noticee has provided/sold such space for advertisement in such “Books” which are also enclosed herewith for ready reference to show that no service tax is attracted on this aspect. Therefore, the alleged activity is not liable to service tax and the entire demand of service tax in this connection on such allegation deserves to be dropped forthwith.

64. It was submitted that this is the only possible and plausible interpretation that can be placed upon section 65 (105) (zzzm) in so far as it relates to print media, since the actual providing of space amount to sale of movable property and therefore the charges for such provision of space are in the nature of price. The said price for the space so provided can never become a consideration for provision for service unless by law a machinery provision is inserted so as to provide for a distinction or bifurcation as to the quantum of component of service and component of price.

65. In the circumstances, it was apparent that the activity undertaken by the Noticee was not a taxable service within the meaning of 65 (105) (zzzm) and was not liable to tax. The noticee was therefore well within its rights not to have obtain a registration under the act for such activity and cannot be faulted on that ground. Consequently, the demand for tax, interest and penalty are without authority of law, untenable, unjustified and liable and therefore does not deserve to be enforced. (PLS. SEE TRADE NOTICE NO. 99/GL-90/C.E./PRO/CAL-II/99 Dated 16.9.99, decisions reported in 2004 (166) ELT 25, 2006 (1) STR 53.

66. As regards Services in respect of Participation fees or delegation fees received for seminars or conferences proposed to be considered as taxable service under category of Commercial Training & Coaching Service as specified in clause (zzc) of Section 65 (105) of the Finance Act, 1994 and an amount of Rs.1,26,55,120/- (as per Annexure: II attached to this show cause notice) received by them towards providing/ rendering the above stated services proposed to be considered as taxable value under the said category of taxable service and Service Tax amounting to Rs.14,16,738/- (S.T.: Rs.13,57,473/- + Education Cess: Rs.27,511/- + Higher Education Cess:Rs.13,754-) as discussed in SCN during F.Y. 2007-08 to 2010-11 proposed to be demanded and recovered under proviso to Section 73(1) of the

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Finance Act, 1994, by invoking larger period of five years as discussed in SCN (Annexure: II to SCN), they clarify it as under that :-

That the SCN had alleged that they had provided services of Commercial Training & Coaching under section 65(105)(zzc) and are liable to service tax. This allegation was not acceptable to them. The provision is reproduced hereunder for reference.

Section of 65 (105) (zzc) reads as under:“taxable service” means any [service provided or to be provided], to any person, by a

commercial training or coaching centre in relation to commercial training or coaching.

[Explanation – For the removal of doubts, it is herby declared that the expression “commercial training or coaching centre” occurring in this sub clause and in clauses (26), (27) and (90a) shall include any centre or institute, by whatever name called, where training or coaching is imparted for consideration, whether or not such centre or institute is registered as a trust or a society or similar other organization under any law for the time being in force and carrying on its activity with or without profit motive and the expression “commercial training or coaching” shall be construed accordingly;]”.

Section 65 (105) (26) and (27) read as under:65 (105) (26) “commercial training or coaching” means any training or coaching provided by

commercial training or coaching centre;

65 (105) (27) “commercial training or coaching centre” means any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field other than the sports, with or without issuance of a certificate and includes coaching or tutorial classes.”

67. A bare perusal of section 65 (105) (zzc) read with section 65 (105) (26 and 27) of the Act will show that the essential ingredients of commercial trading and coaching service is the providing of a service by any institute or establishment engaged in the business of training or coaching for imparting skill, knowledge or lessons, in relation to such imparting of skills, knowledge or lessons.

68. It is therefore evident that being a service within ambit of the act, an entity is required to be a training or coaching centre i.e. an institute or an establishment whose principle business is to train or coach for the purpose of imparting of skills, knowledge, lesson. There is no scope for doubt that the Noticee, which is a Public Limited Company is neither a institute nor an establishment which is engaged in the business of commercial training or coaching. They also rely upon following decisions reported in

(i) AIR 1965 MADRAS 508, (ii) AIR 1984 SC 537 AND (iii) 1972 (1) ALL ER 1130).

69. The Noticee as per the admitted position in paragraph no.30 of the said Notice organizes seminar and conferences on various subjects in respect of a particular industry. Seminar and conferences are traditionally known as recognize to be forums where ideas and views are exchanged. For the conduct of such seminars and conferences and for the purpose of (A) Focusing on the topic and (B) Acquainting the attendees with information, experts are invited to speak on the subject. Various industrial concerns who wish to interact with others and participate in such exchange of views send their delegates to such seminars. The real purpose and the actual conduct of a seminar or conference is an attempt to exchange ideas and enable the participants to acquaint themselves with various facets of the particular industry and not to impart any commercial training or coaching. Seminar and conferences therefore, are intellectual events where each person contributes their ideas and view and reactions. Such activity is at complete variance from the concept of coaching or training which involves an essential element of imparting of commercial training or coaching or knowledge by one and absorption of that knowledge by another, involving a curriculum, a method of imparting / teaching and narrow objective of achieving skill / clarity on a particular aspect. It is therefore submitted that seminars and conferences have a basic an essential

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difference from coaching and training and the two are not reconcilable. Thus, they are not covered under the category of commercial training or coaching centre.

70. The Noticee admittedly, organize a seminar and conferences. For participation in such seminar and conferences by the industry and to provide a forum for exchange of ideas, the Noticee charges a registration fee. The participants / delegates and the experts do not come with a view to train or coach but come with a view to share ideas. Principally, the entire activity does not have the flavor of imparting commercial training or coaching, much less in the nature of training or coaching on commercial terms.

71. Without prejudice to the above contention, the Noticee was not a commercial training or coaching centre and was not engaged in the business of providing any commercial training or coaching, it was submitted that section 65(105)(zzc) was applicable only where some service is provided in relation to commercial training or coaching by a commercial training or coaching centre. The said Notice does not allege that the Noticee has undertaken any activity in relation to coaching or training in a commercial training or coaching centre , which would generally involve providing of study material for a charge, higher qualified teachers hold regular classes etc. In the present case, Noticee is organizing such seminar and conferences on its own. No teachers are also on its pay role. The Noticee does not supply any study material much less paid study material. The seminars and conferences are restricted to one day or two, as against a coaching class where regular teaching takes place of the same students over a period of time.

72. In the circumstances, it was apparent that the activity undertaken by Noticee was not a taxable service within meaning of 65(105)(zzc) and is not liable to service tax. The noticee was therefore well within its rights not to have obtain a registration under the act for such activity and cannot be faulted on that ground. Consequently, the demand for service tax, interest and penalty on this aspect are without authority of law, untenable, unjustified and liable to be dropped and therefore does not deserve to be enforced.

73. As regards, Services provided by them in respect of Stall charges or stall fee received for exhibitions proposed to be considered as taxable service under “Business Exhibition Service” as specified in Section 65(105)(zzo) of Finance Act, 1994 and amount of Rs. 58,45,000/- (as per Annexure: III attached to SCN) received by us towards providing services proposed to be considered as taxable value under the said category of taxable service and Service Tax amounting to Rs.6,83,633/- (S.T.: Rs.5,53,720/- + Education Cess: Rs.13,275/- + Higher Education Cess: Rs.5,638/-) during F.Y. 2007-08 to 2010-11 demanded and proposed to be recovered under proviso to Section 73 (1) of Finance Act, 1994, by invoking larger period of five years as discussed in the SCN (Annexure: III to this show cause notice), we clarify the allegation made in SCN as under :-

74. The SCN has alleged that they have provided services of “Business Exhibition under

section 65(105)(zzo) and are liable to total service tax of Rs. 6,83,633/- as shown in Annexure-III of the SCN. This allegation is also not acceptable to the Noticee. The provision is reproduced hereunder for reference.

75. Section of 65 (105) (zzo) reads as under:

“taxable service” means any service provided or to be provided, to an exhibitor, by the organiser of a business exhibition, in relation to business exhibition;”

76. As per the CBEC Circular No. 80/10/2004-S.T., dated 17-9-2004, it has been clarified in Para 4.1 and 4.2 as under that

Business exhibition service is a service rendered to an exhibitor by an organizer of a business exhibition that intends to market, promote, advertise or show case products or services for growth in business of the producers or providers of such products or services. Thus, organizers of events such as trade fairs, road shows, fashion shows, display show-cases kept in airports, railway stations, hotels etc. would be covered under this new levy. A display of consumer goods

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in shops or shopping centers for customers to select and purchase would normally not attract any service tax, as normally no separate charges are collected by the shop-keepers for displaying such goods. However, in case an amount is collected for merely displaying an item, the same would be chargeable to service tax.

77. While event management service (a currently taxable service) also relates to organizing such events, but in that case, the services are rendered to the organizer by an event manager in relation to planning, promoting, organizing etc. Thus, an organizer of a business exhibition is not covered under Event Management Services, but would be covered under the new levy of ‘Business Exhibition Services’. Similarly, while services rendered in relation to a circular, label, documents, hoardings or any other audio visual representation of a product or service falls under ‘advertisement services’, the services relating to actual exhibition or display of the product or services would fall under the category of ‘Business Exhibition Services’.

In view of the above the activity of Noticee is not covered in this service.

78. In the reported case 2012 (28) STR-156 (Tri. - Del.) - Impact Communications such activities have been prima facie held as ‘Event Management services’ with the following observations :-

Event Management services - Promotion of products, organising stalls at exhibition, displaying advertisements - Assessee’s contention that services more appropriately classifiable under Business Auxiliary Services or Business Exhibition services - HELD : Prima facie services fall under ‘Event Management services’ - Even if services under Business Auxiliary Services or Business Exhibition services, tax liability to arise - Not case for complete waiver of pre-deposit - Sections 65(40) and 65(105)(zu) of Finance Act, 1994. [para 9]

79. In the reported case 2011 (21) S.T.R. 580 (Tri. - Bang.) - KRISHNA INDUS. & AGRICULTURAL EXHIBITION SOCIETY v/s CCE, such activities have been prima facie held as ‘Appellant collecting rent from business exhibitors’ with the following observations :-

Stay/Dispensation of pre-deposit - Business Exhibition Service - Hiring out facilities - Appellant collecting rent from business exhibitors - Factual finding by Commissioner (Appeals) that exhibitions not conducted or performed by appellant on own but only required facilities provided - Amount collected towards rent for hiring of various stalls - Activity prima facie may not get covered under definition of Business Exhibition Services - Pre-deposit waived and recovery thereof stayed - Section 35F of Central Excise Act, 1944 as applicable to Service tax vide Section 83 of Finance Act, 1994. [para 5]

80. In the reported case 2010 (17) S.T.R. 296 (Tri. - Bang.) - KARNATAKA EXHIBITION AUTHORITY v/s CCE, such activities have been prima facie held as ‘Leasing stalls not covered under Business Exhibition Service’ with the following observations :-

Stay/Dispensation of pre-deposit - Business Exhibition Service - Land having stalls leased out by tender - Revision order holding that service provided indirectly through agent also covered and demand confirmed on lease amounts - Leasing stalls not covered under Business Exhibition Service - Prima facie case made out - Pre-deposit waived - Recovery stayed - Section 35F of Central Excise Act, 1944 as applicable to Service tax vide Section 83 of Finance Act, 1994. [paras 3, 5, 6]

81. Accordingly, in view of these case laws, it may be held as event management service or renting or leasing and service tax liability is on the event manager of such event itself. Therefore, when they have not taken any services of any event manager, there is no service tax liability on them.

82. That without prejudice to the above contention, they pointed out that the total service tax liability on this aspect was alleged/worked out to be Rs. 6,83,633/- on total taxable value of Rs. 58,45,000/- as shown in Annexure-III of this SCN. Copy enclosed. However, it was pointed out that quantification made in its Part C (page-I & II) shows that stall charges not considerable as sponsorship service are as under for the following years :

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83. That without prejudice to above submission, it was further clarified that assuming without admitting that even if service tax is payable by them to Government of India, the value of the taxable service requires to be considered as cum-tax value, as such demand of service tax is raised only after providing services and accounts have been settled and that they are not likely to receive any such amount of service tax in question from the persons from whom they have received such amount initially while finalizing the transactions. The quantum of service tax requires to be recalculated in view of the established law, after granting otherwise allowable benefit of the “Cum-tax-value” as cum-tax price and modified to quantify amount of service tax payable thereon, even if held to be payable. This will be in consonance in terms of provisions under section 67(2) of the Finance act 1994 and the taxable value and service tax thereon requires to be considered accordingly. The Noticee is not likely to receive any other amounts from the said persons who have already made the agreed payments long back and there is no continued business relations with those persons, Noticee has also closed their books of accounts. The received amount has to be treated as “Cum-tax-value”, even if service tax is held as payable. Service Tax demand requires to be re-calculated on this aspect only. This view is also supported by judicial decision ordered in case of M/s Advantage Media Consultant - 2008(10)STR-449(Tri.- Kolkata) and also maintained by the Hon’ble Supreme Court as reported in 2009(14) S.T.R. J49 (S.C.)]. Such ratio of decisions is followed by the Hon’ble CESTAT Ahmedabad as well in many other such cases reported or otherwise.

84. Without prejudice to the above submission, it was further clarified that assuming without admitting that even if service tax is payable by us to Government of India, Cenvat credit of input services also requires to be allowed first, while charging service tax.

85. Moreover, they submitted that the demand of Service Tax even for the remaining amount invoking extended period was also objected. SCN was hit by time limitation, as demand of Service Tax for 2007-08 to 2010-11 had been demanded by this SCN dt. 08-10-2012. Noticee has not suppressed any facts. Therefore, SCN/demand, if any, could have been issued within time limit of one year from 2007-08 onwards as permitted u/s 73 of Finance Act. There is nothing on record or evidence to justify allegation that Service Tax was not paid or short paid with “Intention to evade Service Tax”.

86. That the essential ingredients to invoke extended period are not existing in this case. The prime pre-requisite requirement is “Intention to evade Service Tax” to invoke extended period for demand of Service Tax, which is not existing in the present case. None of the ingredients required to justify extended period are existing in this case. The essential Ingredients i.e. “fraud, Collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made with intent to evade payment of Tax/duty” are essentially required to invoke extended period u/s 73 of Finance Act which are not existing. Hence, demand/Show cause Notice of Service Tax w.e.f. 2007-08 vide SCN dt. 08-10-2012 with extended period is not justified or sustainable. The law is also established and settled by now on this point through various judicial decisions including in case of COSMIC DYE CHEMICAL reported at 1995 (75) E.L.T. 721 (S.C.) to the effect that if the essential ingredients with intent to evade payment of duty to invoke extended period are not existing the demand for the period prior to one year from the date of SCN can not be sustained. Such legal view which is applicable in facts of this case, may now be applied in this case. Thus, the demand of service tax dt. 08-10-2012 is time barred as the demand pertains to period from 2007-08 to 2010-11 which is beyond normal time limit of “one year” for demanding service tax and further more the demand of service tax is also on assumptions and presumptions.

87. That Such SCN is hit by time limitation, as demand of Service Tax for 2007-08 onwards is demanded by SCN dt. 08-10-2012. The Noticee had not suppressed any facts. Therefore, SCN/demand, if any, could have been issued within the time limit of 1 year as permitted u/s 73 of Finance Act. There is nothing on record or evidence to justify that Service Tax was not paid or short paid with “……….. Intention to evade Service Tax”. Essential ingredients to invoke extended period are not existing in this case. The prime pre-requisite requirement is “……Intention to evade Service Tax” to invoke extended period for demand of the Service Tax, which is not existing in the present case. Although, the SCN refers that all ingredients exists to invoke extended period, but it has not been proved in the Noticee that any of the ingredients required to justify extended period are existing in this case. The essential Ingredients i.e. “fraud, Collusion or any wilful mis-statement or

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suppression of facts, or contravention of any of provisions of Act or of rules made with intent to evade payment of Tax” are essentially required to invoke extended period u/s 73 of Finance Act which are not existing in this case. Hence, demand/Show cause Notice of Service Tax vide SCN dt. 08-10-2012 with extended period is not justified. The law is established and settled by now on this point through various judicial decisions to the effect that if the above mentioned essential ingredients to invoke extended period are not existing the demand for the period prior to one year from the date of SCN.

88. That without prejudice to the aforesaid submissions, Noticee submitted that the present show cause notice was wholly time barred. The law about invocation of extended period of limitation is well settled. Only in a case where the Noticee knew that certain information was required to be disclosed and yet the Noticee deliberately did not disclose such information, the case would be that of suppression of facts. When Excise Officers called or certain information and Noticee did not disclose the same or deliberately disclosed wrong information, that would be a case of willful mis-statement. Even in cases where certain information was not disclosed as the Noticee was under a bonafide impression that it was not duty bound to disclose such information, it would not be a case of suppression of facts as held by the Hon’ble Supreme Court in the landmark cases of Padmini Products and Chemphar Drugs & Liniments, cases reported in 1989 (43) ELT 195 (SC) and 1989 (40) ELT 276 (SC) respectively. What is “suppression” is once again considered by the Hon’ble Supreme Court in the case of Continental Foundation Jt. Venture V/s CCE, Chandigarh reported in 2007 (216) ELT 177 (SC), and it is held by the Hon’ble Supreme Court with regard to the proviso to Section 11A of the Central Excise Act, 1944, that mere omission to give correct information was not suppression of facts unless it was deliberate and to stop the payment of duty. In the previous case like Messrs Jaiprakash Industries Ltd. reported in 2002 (146) ELT 481 (SC) also, the Hon’ble Supreme Court has held that a bonafide doubt as to non-dutiability of goods was sufficient for the Noticee to challenge the demand on the point of limitation. Thus, it was a totally settled legal position that extended period of limitation by invoking proviso to the main Section for demanding duty or tax beyond the normal period of limitation would be justified only when the Noticee knew about the duty/tax liability and still however, he did not pay the tax and deliberately avoided such payment, and it was only such a situation where suppression of facts on part of the Noticee could be justifiably alleged by the Revenue. However, mere failure in giving correct information would not be a case where the Revenue can invoke extended period of limitation.

89. That in fact, the present one was a case where all facts of payments of service tax in Government by Insurance companies in respect of services received by them from Noticee on which this show cause notice has been issued to them were within the knowledge of the Department right from day one. Under these circumstances, the show cause notice issued to them was barred by limitation in facts of this case. Extended period not invokable without having any such allegation/justification in SCN, which Admittedly, beyond the period of limitation of “One year” prescribed under Section 73(1) but it is within the extended period of 5 years under the proviso to that sub-section. In order to attract the proviso, it must be shown that the tax is not paid by reason of fraud, collusion or wilful mis-statement or suppression of fact or contravention of any provision of the Act or of the Rules made thereunder with intent to evade payment of tax. Therefore, in order to attract extended period under the proviso to Section 73(1), it must be alleged in the show cause notice that service tax is not paid by reason of fraud, collusion or wilful mis-statement or suppression of fact on the part of the Noticee or by reason of contravention of any of the provisions of the Act or of the Rules made thereunder with intent to evade payment of tax by such person or his agent. There is no such averment in show cause notice. There is no averment that service tax is not paid intentionally to evade tax or with any fraud or collusion or that the Noticee is guilty of wilful mis-statement or suppression of fact. In the absence of such averments with supporting evidences in SCN, it is difficult to understand as to how any person with reasonable prudence can up held such show cause notice under proviso to Section 73(1) of the Act invoking extended period of time limitation. Supreme Court’s decision 1995 (76) E.L.T. 497 (S.C.)- CCE v/s H.M.M. LIMITED wherein it is held that “Limitation for extended period not invokable unless show cause notice puts Noticee to notice specifically as to which of the various commissions or omissions stated in the proviso to Section 11A(1) of Central Excises & Salt Act, 1944 had been committed, is squarely applicable in this case to vacate this SCN. Hence, this SCN deserves to be vacated only on this ground alone.

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90. Under the circumstances, once again, they requested to kindly consider the above submissions and not to proceed any more to recover any duty with interest and penalty, as proposed in this SCN, in the interest of justice and fairness in this proceedings. Thus, demand of service tax dt. 08-10-2012 was time barred as the demand pertains to period from 2007-08 onwards which is beyond normal time limit of one year for demanding service tax and demand is on assumptions and presumptions. Quantification of Service Tax demand was not correct and was without any justification.

91. That the Quantification of the Service Tax demand was not correct and is without any justification.

92. That the SCN had not considered following reason for waiver of the penalties proposed u/s 76, 77 and 78 in view of section 80 of Finance Act. That Service tax being new levy had confusions in implementation. The CBEC has to give clarification vide its Circular No. 97/8/2007-S.T., dated 23-8-2007 and also amend the provision for levy of the Tax clearly shows that there was confusion to implement the said levy. Noticee has clarified to adjudicating authority that as they were under bonafide belief that they were not liable to pay service tax demanded in SCN, they could not deposit the same. There was no malafide intention on their part for not paying the due service tax. These are reasonable cause for failure to deposit of Service Tax demanded in SCN. Hence, this is a fit case for waiver of the penalty under section 76, 77 and 78, in terms of section 80 of Finance Act 1994.

93. In view of the above submissions, it may be appreciated that no service tax is payable by them or the same is recoverable from them as proposed in this SCN. The entire demand of Service tax in this SCN deserves to be dropped forthwith. That When the service tax was not recoverable from the Noticee, consequently the proposed demands of recovery of interest u/s 75 of the Finance Act 1994 also does not arise.

94. When the service tax was not recoverable from them, consequently the proposed demands of recovery of penalties u/s 76, 77 and 78 of the Finance Act 1994 also does not arise. Moreover, they also prayed to consider waiver of all penalties under section 80 of Act. The SCN has not considered reasons for waiver of the penalties proposed u/s 76, 77 and 78 in view of section 80 of Finance Act.

95. In view of above submissions, M/s Saket submitted that the entire demand of Service tax, Interest and penalties proposed in this SCN deserves to be dropped.

PERSONAL HEARING

96. M/s Saket was granted personal hearings on 21.05.2013/ 17.06.2013/24.09.2013/27.11.2013. Shri P P Jadeja, Consultant for the assessee appeared for hearing on 27.11.2013. Shri Jadeja reiterated the arguments and submissions made in their reply dated 17.04.2013. He also produced copies of the Print media also (3 Books).

DISCUSSIONS AND FINDINGS

97. I have carefully gone through the facts on records, the show cause notice under reference and submissions made by M/s Saket vide their letter dated 17.04.2013 and during the personal hearing.

98. The issue to be decided in the instant case are as under :

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(i) whether the activity performed / services provided by M/s Saket can be classified as taxable service under the category of “Sale of Space or Time for Advertisement Services” as specified in clause (zzzm) of Section 65 (105) of the Finance Act, 1994

(ii) whether Services provided by them in respect of Stall charges or stall fee received for exhibitions can be classified as taxable service under “Business Exhibition Service” as specified in Section 65(105)(zzo) of Finance Act, 1994

(iii) whether Services provided/ rendered by them in respect of Participation fees/ delegation fees received for their seminars/ conferences can be classified as taxable service under the category of Commercial Training & Coaching Service as specified in clause (zzc) of Section 65 (105) of the Finance Act, 1994.

Sale of Space or Time for Advertisement Services

99. During course of investigation by the service tax preventive officers, it came to notice that M/s Saket was bringing out some magazines and was generating income by way of publishing advertisements in their magazines. M/s Saket was showing such income in their balance-sheet under the head ‘income from publication’. Perusal of the publications revealed that they were in the nature of business directories/ trade catalogues and hence publishing income generated by printing advertisements amounted to “selling of space in print media”, which was an activity taxable under service category “Sale of Space or Time for Advertisement” under sub-clause (zzzm) of clause (105) of section 65 of the Finance Act, 1994. M/s Saket received an income of Rs.1,17,86,631/- during the period from 2007-08 to 2010-11 as publishing income. This income is in fact the sum total of amount charged by M/s Saket to their clients for placing advertisements in their publications namely “Textile Review”, “Steam & Boiler Review” and “Indian Port & Infrastructure Review” etc.

100. The subject show cause notices seek to consider these income amounts as taxable amounts under service category “Sale of space or time for advertisement services” and charge the appropriate service tax thereon. M/s Saket has denied the service tax liability on the ground that the impugned publications through which the advertising income has been generated, fall under exclusion clause of the definition of space selling service given under section 65 (105)(zzzm). The services of “Sale of Space or Time for Advertisement Services” were introduced w.e.f. 1.05.2006. The definition of the taxable service is as per Section 65(105)(zzzm) of the Finance Act, 1994. The definition at the time of the introduction of the service was as follows:-

“(zzzm) to any person, by any other person, in relation to sale of space or time for advertisement, in any manner; but does not include sale of space for advertisement in print media and sale of time slots by a broadcasting agency or organisation.

Explanation 1. — For the purposes of this sub-clause, “sale of space or time for advertisement” includes, —

(i) providing space or time, as the case may be, for display, advertising, showcasing of any product or service in video programmes, television programmes or motion pictures or music albums, or on billboards, public places, buildings, conveyances, cell phones, automated teller machines, internet;

(ii) selling of time slots on radio or television by a person, other than a broadcasting agency or organisation; and

(iii) aerial advertising.32

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Explanation 2. — For the purposes of this sub-clause, “print media” means “book” and

“newspaper” as defined in sub-section (1) of section 1 of the Press and Registration of Books

Act, 1867 (25 of 1867);”

101. The definition of the taxable service was amended w.e.f. 01.06.2007, which is as under:-

“(zzzm) to any person, by any other person, in relation to sale of space or time for advertisement, in any manner; but does not include sale of space for advertisement in print media and sale of time slots by a broadcasting agency or organisation.

Explanation 1. — For the purposes of this sub-clause, “sale of space or time for advertisement” includes, —

(i) providing space or time, as the case may be, for display, advertising, showcasing of any product or service in video programmes, television programmes or motion pictures or music albums, or on billboards, public places, buildings, conveyances, cell phones, automated teller machines, internet;

(ii) selling of time slots on radio or television by a person, other than a broadcasting agency or organisation; and

(iii) aerial advertising.

Explanation 2. — For the purposes of this sub-clause, ‘‘print media’’ means, —

(i) ‘‘newspaper’’ as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867 (25 of 1867);

(ii) ‘‘book’’ as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867 (25 of 1867), but does not include business directories, yellow pages and trade catalogues which are primarily meant for commercial purposes;”

101.1 The said amendment was clarified vide Circular dated 28.02.2007 issued from D.O.F. No. 334/1/2007-TRU, dated 28-2-2007 (Extracts). The said clarification is as follows:-

“7. Amendments :7.1 Sale of space or time for advertisement [section 65(105)(zzzm] : Definition of the term

“Book” is being amended so as to exclude business directories, yellow pages and trade

catalogues which are primarily meant for commercial purposes from the scope. Consequently

sale of space for advertisement in such publications will also be leviable to service tax

under this service.”

102. Thus, with effect from 01.06.2007, the income relating to advertisement in print media [ except for books and newspaper as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867 (25 of 1867)] which were primarily meant for commercial purposes became taxable under the category “Sale of Space or Time for Advertisement” Services. It was further clarified that the print media does not include business directories, yellow pages and trade catalogues. Hence, selling of space for advertisement in such books and publications became liable to service tax.

103. M/s Saket has in their defence reply stated that as per the terms of agreement with their customers, they publish advertisements in their trade journals for a specified consideration. M/s Saket cites the definition of “Sale of space or time for advertisement” given under sub-clause (zzzm) of clause (105) of section (65) and contends that the

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magazines published by them are books and the same cannot be classified as trade catalogues or business directories. They have supplied copies of some publications for reference and to show that the publications were not in the nature of directories, yellow pages and trade catalogues.

104. I have perused the copies of publications supplied by M/s Saket to show that the publications in question are ‘books’ and not business directories, yellow pages and trade catalogues. Having gone through the publications, I find that they are more in the nature of advertising publications and primarily serve the purpose of publishing name, brand and similar content as a form of print advertisement. A major part of these publications has been used in advertising for consideration and therefore it is clear that the publications are akin to business directories and trade catalogues and since all these advertisements are being paid by the clients, the space used in placing these advertisements is purely for commercial purpose. In all such magazines, M/s Saket was providing latest, precise and most authenticated information on the events taking shape on the industrial/economic landscape of the country, with this objective, editorial-mix of the magazine is conceived in form of a news capsule so that, it meets with the expectations of its readership. The magazine, therefore, are conceived as niche magazine all are related to the corporate and commercial nature. I find that in the instant case, the business directory/ trade catalogue is being published in a book form and therefore cannot escape taxability in the guise of being a ‘book’ as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867 (25 of 1867).

105. I have also gone through Press and Registration of Books Act, 1867 (PRB Act, for short)wherein, under interpretation clause – “Book” includes every volume, part or division of a volume, and pamphlet, in any language, and every sheet of music, map, chart or plan separately printed. The impugned publications, even if categorized as books under this definition under the PRB Act, it still remains a fact that as per Explanation to the definition of service “Sale of space or time for advertising”, the ‘book’, even if covered under sub-section (1) of section (1) of the PRB Act, does not include business directories, yellow pages and trade catalogues which are primarily meant for commercial purpose. Hence, the publications by virtue of classification as ‘books’ do not per se become non taxable under the exclusion clause. The ‘books’ are in the exclusion clause only when they are not the business directories, trade catalogues, etc.

106. Also , I find that it may be a fact that some of the publications of M/s Saket are registered with the government authorities, especially with the office of the Registrar of Newspapers for India (RNI registration). It is also a fact that certain publications mandatorily require registration with the Registrar of Newspapers for India, but how this registration itself is necessary and sufficient to claim exclusion from the applicability of service tax is not forthcoming in M/s Saket’s reply. RNI registration is mandatory in terms of PRB Act, however, the purpose of this registration is altogether different. In other terms, if a business catalogue or a trade catalogue is printed in a book form and registered under the PRB Act, it does not come under the exclusion clause merely by virtue of RNI registration. Had this been the case, the definition of taxable service in this case, i.e., - Sale of space or time for advertisement - would have carried such a clause or explanation. As there is nothing in the definition, it cannot be presumed that just for the reason that the publications have RNI registration, the space selling in such registered publications become non taxable.

107. In view of the above, I find that the publications of M/s Saket which are in the nature of business directory or trade catalogues are specifically excluded from the ‘print media’ under Explanation to the definition of “Sale of space or time for advertisement”, selling of space in

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such publications is chargeable to service tax under the category Sale of space or time for advertisement.

108. I also find that, in some of the invoices, M/s Saket had misdeclared the services provided as Sponsorship services, which were infact the services provided under the category of “Sale of space or time for advertisement” and thereby evaded payment of service tax, as has been conclusively proved during the investigation. For confirmation of facts, I list out 2 invoices as under :

(1) The details as shown in Invoice No.TR-016 , dated 25-08-2008 (F. Y. 2008-09) for Rs.9,50,000/- issued by M/s Saket in favor of M/s Torrent Power Limited , Electricity House, Lal Darwaja, Ahmedabad is as under:

“Advertisement: Full page Colour (Eighteen issues @ Rs.75,000/- per issue)”,

Publication: Textile Review

Issue: October, 2008 to March, 2010: Rs.13,50,000/-

Less: Special Discount: Rs. 4,00,000/-

Invoice amount: Rs.9,50,000/-

In this connection, M/s Torrent Power Limited, Ahmedabad have also furnished vide their letter dated 24-08-2012 the relevant documents showing that out of 3 (three) invoices, 2 (two) invoices pertains to Advertisement service and not sponsorship service as can be observed from the details thereof as mentioned below:

(i) Invoice no.TR-016, dated 25-08-2008 for Rs.9,50,000: Advertisement: Full Page Colour: Textile Review

(ii) Invoice no.S&B-005, dated 25-08-2008 for Rs.9,50,000: Advertisement: Full Page Colour: Steam & Boiler Review

Thus, it is proved without doubt the services as mentioned in the above invoice pertains to Sale of Space and Time for Advertisement Services and not of ‘Sponsorship Services’ as claimed by M/s Saket.

(2) The details as shown in Invoice No.E/2020/6 , dated 20-12-2010 (F. Y. 2010-11) for Rs.1,00,000/- issued by M/s Saket in favor of M/s Suzlon Energy Limited , Shrimali Society, Behind Shri Krisahna Centre, Navrangpura, Ahmedabad is as under:

“Advertisement: Two Full Page Four Colour”,

Publication: Energy India

In this regard, M/s Suzlon Energy Ltd., Ahmedabad have also furnished vide their letter dated 24-08-2012 the relevant documents showing that out of 4 (four) invoices, 1 (two) invoice pertains to Advertisement service and not sponsorship service as can be observed from the details thereof as mentioned below:

“Invoice no. E-2020/6, dated 20-12-2010 for Rs.1,00,000: Advertisement: Full Page Colour: Energy India 2020”

Thus It is proved without doubt the services as mentioned in the above invoice pertains to Sale of Space and Time for Advertisement Services and not of Sponsorship Services as claimed by M/s Saket.

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Busin e ss Exhi b ition Service

109. I find that from the documents provided by M/s Saket, it is clear that they were providing services namely organizing exhibitions/conferences in a close understanding of their clients' needs and priorities and that they have collected “Stall Charges/Stall fees” from their customers, to the tune of Rs. 58,45,000/- during the periods from 2007-08 to 2010-11, which was meant for exhibiting the products, as mentioned by Shri Manoj L Patel, in his statement dated 14.04.2012 , Senior Manager (Finance) of M/s Saket, has admitted as under :

“On asking about the whole aim of organizing the so-called conference, which apparently has sponsors, delegates and exhibit their products also, he deposed that whole aim of organizing conferences is to have awareness to the people of industry by exchange of knowledge of supply, demand, technical knowledge, Govt. policies, new researches etc. regarding particular industry to the industry people. Regarding advertisers, he stated that, they are accepting advertisement form the parties of the particular industry who wish to advertise themselves and their product amongst the people who are participating during the any given conferences. Similarly, particularly in their three conferences on STEAM TECH, WASTE MANAGEMENT and ENERGY, some of parties willing to only display their products but not selling their products amongst the participants and sponsors by way of stall in the exhibition.”

109.1 However, I find that Shri Manoj L Patel, in his statement dated 28.07.2012 has claimed as under :

“that in respect of Stall charges at the Exhibition held by their company, it is to clarify that the sub-clause of Section 65 of the Finance Act, 1994 as amended by the finance Act, 2002 is clearly stating that revenue which has been generated by renting out of exhibition place, is under event management and where the event is organized or managed by in-house, no service tax is payable as event management services. Further it has been also clarified that service tax under the category of event management services is not leviable on the sale proceed of tickets or revenue generated from the sale of space. In view of the above, they have not discharged the service tax liability in this regards and we have not amended our service tax registration accordingly.”

110. The definition of taxable services namely: Business Exhibition Service as per Section 65 (105) (zzo) of the Finance Act, 1994 read with Section 65 (19a) of the Finance Act, 1994 and, is reproduced below:

65 (105) (zzo): to an exhibitor, by the organizer of business exhibition, in relation to business exhibition;

65 (19a):“business exhibition” means an exhibition, —

(a) to market; or

(b) to promote; or

(c) to advertise; or

(d) to showcase,

any product or service, intended for the growth in business of the producer or provider of such product or service, as the case may be.

111. The definition of taxable services namely: Event Management Service as per Section 65 (105) (zu) of the Finance Act, 1994 read Section 65 (40) of the Finance Act, 1994, is reproduced below:

65 (105) (zu): to any person, by an event manager in relation to event management.

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65 (40): "event management" means any service provided in relation to planning, promotion, organizing or presentation of any arts, entertainment, business, sports, marriage or any other event and includes any consultation provided in this regard;

112. In view of the above, the services relating to actual exhibition or display of products or services would fall under the category of taxable services namely, ‘Business Exhibition Services’ and not under “Event Management Services” wherein as Event Manager is involved whereas in tis case M/s Saket /sponsors themselves are involved in organizing the Business Exhibition.is involved in

113. In this regards, I find that the instructions issued vide C.B.E.C. Circulars no.80/10/2004-ST, dated 17-09-04 also are relevant.

“4.1 Business exhibition service is a service rendered to an exhibitor by an organizer of a business exhibition that intends to market, promote, advertise or show case products or services for growth in business of the producers or providers of such products or services. Thus, organizers of events such as trade fairs, road shows, fashion shows, display show-cases kept in airports, railway stations, hotels etc. would be covered under this new levy. A display of consumer goods in shops or shopping centers for customers to select and purchase would normally not attract any service tax, as normally no separate charges are collected by the shop-keepers for displaying such goods. However, in case an amount is collected for merely displaying an item, the same would be chargeable to service tax.

4.2 While event management service (a currently taxable service) also relates to organizing such events, but in that case, the services are rendered to the organizer by an event manager in relation to planning, promoting, organizing etc. Thus, an organizer of a business exhibition is not covered under Event Management Services, but would be covered under the new levy of ''Business Exhibition Services''. Similarly, while services rendered in relation to a circular, label, documents, hoardings or any other audio visual representation of a product or service falls under ''advertisement services'', the services relating to actual exhibition or display of the product or services would fall under the category of ''Business Exhibition Services''.

114. In the case of M/s TAMIL NADU TOURISM DEV. CORPN. LTD.Versus COMMR. OF S.T., CHENNAI reported at 2012 (25) S.T.R. 84 (Tri. - Chennai) , the Hon’ble Tribunal has prima facie held that the Activity of allotting the stalls to small traders and artisans to market, promote and showcase their own production in addition of showcasing of the achievements of the client, prima facie, falls under Business Exhibition Service and ordered that pre-deposit of Rs. 3 lakhs has to be paid, otherewise the appeal would be dismissed.

115. Thus, in view of the above discussions, I find that there is no doubt that the collection of the stall charges by M/s Saket in lieu of displaying of the products would fall under the category of “Business Exhibition Services” and not under “Event Management services” as claimed by them.

COMMERCIAL TRAINING OR COACHING SERVICES

116. I find that M/s Saket provides the services of commercial training in their various seminars, while organizing different types of conferences and exhibitions. Therefore, in view of the above, I find that such activities are well covered under the taxable services namely: Commercial Training or Coaching Services.

117. The definition of taxable services namely: Commercial Training or Coaching Service as per Section 65 (105) (zzc) of the Finance Act, 1994 read with Section 65 (26) and 65 (27), is reproduced below:

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(zzc) to any person, by a commercial training or coaching centre in relation to commercial training or coaching;

[Explanation.—For the removal of doubts, it is hereby declared that the expression “commercial training or coaching centre” occurring in this sub-clause and in clauses (26), (27) and (90a) shall include any centre or institute, by whatever name called, where training or coaching is imparted for consideration, whether or not such centre or institute is registered as a trust or a society or similar other organisation under any law for the time being in force and carrying on its activity with or without profit motive and the expression “commercial training or coaching” shall be construed accordingly;

(26) "commercial training or coaching" means any training or coaching provided by a commercial training or coaching centre;

(27) "commercial training or coaching centre" means any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field other than the sports, with or without issuance of a certificate and includes coaching or tutorial classes but does not include preschool coaching and training centre or any institute or establishment which issues any certificate or diploma or degree or any educational qualification recognized by law for the time being in force;

117.1 Further as per Wikipedia, the word “Training” means the acquisition

of knowledge, skills, and competencies as a result of the teaching of vocational or practical skills

and knowledge that relate to specific useful competencies.

118. According to the above definitions, services provided by M/s Saket becomes taxable as service of Commercial Training or Coaching Service for the following reasons:

(i) The service is in relation to commercial training.(ii) The service of training is provided to their clients/ customers by M/s Saket for

consideration (which includes cash too), as the participants and delegates attending the conferences/ seminars/ exhibitions have made payments to them as delegation fee and participation charges.

(iii) The training imparted by M/s Saket includes skill, knowledge, lessons and almost every kind of imparting of information on various subjects related to commerce and industry. Hence it is well covered under the definition of taxable services.

(iv) Any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field with or without the issuance of a certificate is commercial training or coaching centre.

119. However, I find that M/s Saket has contended in their defence that being a service within ambit of the act, an entity is required to be a training or coaching centre i.e. an institute or an establishment whose principle business is to train or coach for the purpose of imparting of skills, knowledge, lesson. There is no scope for doubt that they are a Public Limited Company, which is neither a institute nor an establishment which is engaged in the business of commercial training or coaching and that the real purpose and the actual conduct of a seminar or conference is an attempt to exchange ideas and enable the participants to acquaint themselves with various facets of the particular industry and not to impart any commercial training or coaching. Seminar and conferences therefore, are intellectual events where each person contributes their ideas and view and reactions. Such activity is at complete variance from the concept of coaching or training which involves an essential element of imparting of commercial training or coaching or knowledge by one and absorption of that knowledge by another, involving a curriculum, a method of imparting / teaching and narrow objective of achieving skill / clarity on a particular aspect.

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120. In this connection, I refer to Board’s Circular No. 107/1/2009-S.T., dated 28-1-2009, wherein it has been clarified that the word “Commercial” used in the definition is with reference to activity of training or coaching and not to the nature or activity of the institute providing training or coaching.

“2. Commercial Nature of Institute

The first issue arises from the very name i.e. Commercial ‘training or coaching center’. Many service providers argue that the word commercial appearing in the aforementioned phrase, suggests that to fall under this definition, the establishment or the institute must be commercial (i.e. having profit motive) in nature. It is argued that institutes which are run by charitable trusts or on no-profit basis would not fall within the phrase ‘commercial training or coaching center’ and none of their activities would fall under the taxable service. This argument is clearly erroneous. As the phrase ‘commercial training or coaching center’ has been defined in a statute, there is no scope to add or delete words while interpreting the same. The definition commercial training or coaching center has no mention that such institute must have ‘commercial’ (i.e. profit making) intent or motive. Therefore, there is no reason to give a restricted meaning to the phrase. Secondly, service tax, unlike direct taxes, is chargeable on the gross amount received towards the service charges, irrespective of whether the venture is ‘profit making, loss making or charity oriented’ in its motive or its outcome. The word “Commercial” used in the phrase is with reference to the activity of training or coaching and not to the nature or activity of the institute providing the training or coaching. Thus, services provided by all institutes or establishments, which fulfills the requirements of definition, are leviable to service tax.”

(Emphasis supplied)

121. Further I find that “commercial training or coaching services” shall include any centre or institute, by whatever name called, where training or coaching is imparted for consideration, whether or not such centre or institute is registered as a trust or a society or similar other organisation under any law for the time being in force

(emphasis supplied)

122. I find from the investigation carried out, that M/s Saket not only provides commercial training to their delegates, for which they collect delegation fees/participation charges, but are also well covered under the definition , which includes any organization which does so. Thus their plea that their activity was at complete variance from the concept of coaching or training which involves an essential element of imparting of commercial training or coaching or knowledge by one and absorption of that knowledge by another, involving a curriculum, a method of imparting / teaching and narrow objective of achieving skill / clarity on a particular aspect is not tenable. I find that commercial training can be imparted by an public limited company like theirs or a coaching centre alike. Thus when they collect any fees as consideration for the training/participation in their seminars, they are well covered under the taxable services of “Commercial training or Coaching Services”.

123. Further, I also find that in some of the invoices, M/s Saket had misdeclared the services provided as Sponsorship services, which were infact the services provided under the category of “Commercial Training or Coaching Services” and thereby evaded payment of service tax, as has been conclusively proved during the investigation. For confirmation of facts, I list out 2 invoices as under :

(1) The details as shown in Invoice No.111 , dated 01-11-2007 (F. Y. 2007-08) for Rs.4,00,000/- issued by M/s Saket in favor of M/s Sadbhav Engineering Limited , Sadbhav House, Opp. Law Garden Police Chowky, Ellisbridge, Ahmedabad is as under:

“Being the charges towards participation in the seminar of Risk Management & Effective Implementation of Construction Projects held at Bhaikaka Bhavan, Law Garden, Ahmedabad on 6-7th October, 2007”

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In this regards, a statement of Shri Kapil Bokadia, Senior Manager (Taxation) of M/s Sadbhav Engineering Ltd., Ahmedabad was recorded on 24-08-2012 under Section 14 of the Central Excise Act, 1994 as made applicable to service tax matter under Section 83 of the Finance Act, 1994, wherein he interalia deposed that:

“On being asked I state that our company has made payment of charges to the service provider namely: M/s Saket Projects Limited, Saket House, 1, Panchsheel, Usmanpura, Ahmedabad as per details furnished hereunder during the financial year: 2007-08 to 2010-11:

(i) Cheque no.276430, dated 21-09-2007 for Rs.1,00,000/-(ii) Cheque no.276535, dated 05-10-2007 for Rs.3,00,000/-

I hereby depose that the above stated payment has been made by our company towards participation in the seminar on risk management & Effective Implementation of Construction Projects held on 6th & 7th October, 2007. In this respect I also enclose herewith a copy of the Invoice no.111, dated 01-11-2007 issued by M/s Saket Projects Limited, Saket House, 1, Panchsheel, Usmanpura, Ahmedabad for an amount of Rs.4,00,000/-. Further, I also depose that we both the parties have not entered in to any written agreement/ contract since 2007 till date for any transaction whatsoever and we have not made any written memorandum of understanding for any payment made to them. I also depose that our company did not enter into any sponsorship arrangement with them and hence question of payment of service tax on such payment of Rs.4,00,000/- made by us does not arise at all in view of the provisions of Rule 2 (1) (d) (viii) of the Service Tax Rules, 1994 as a recipient of taxable services.”

It is thus proved without doubt that the services as mentioned in the above invoice pertains to Commercial Training or Coaching Services and not of Sponsorship Services as claimed by M/s Saket.

(2) The details as shown in Invoice No.109 , dated 01-11-2007 (F. Y. 2007-08) for Rs.2,50,000/- issued by M/s Saket in favor of M/s Ranjit Buildcon Limited , Ranjeet House, Opp. Subn Residency, Behind Bhagwat Bungalow, Thaltej, Ahmedabad is as under:

“Being the charges towards participation in the seminar of Risk Management & Effective Implementation of Construction Projects held at Bhaikaka Bhavan, Law Garden, Ahmedabad on 6-7th October, 2007”

In this regards, a statement of Shri Ripal Manubhai Patel, Accountant and authorized person of M/s Ranjit Buildcon Ltd., Ahmedabad was recorded on 10-09-2012 under Section 14 of the Central Excise Act, 1994 as made applicable to service tax matter under Section 83 of the Finance Act, 1994, wherein he interalia deposed that:

“I have been shown the Invoice no.109, dated 01-11-2007 issued by M/s Saket Projects Limited, Saket House, 1, Panchsheel, Usmanpura, Ahmedabad in favor of M/s Ranjit Buildcon Ltd., Ahmedabad and in token thereof I have signed on the body of the said invoice. On being asked I state that our company has made payment of advertisement charges to the service provider namely: M/s Saket Projects Limited, Saket House, 1, Panchsheel, Usmanpura, Ahmedabad as per details furnished hereunder during the financial year: 2007-08 to 2010-11:

(iii) Cheque no.263213, dated 28-09-2007 for Rs.2,00,000/-(iv) Cheque no.263226, dated 05-10-2007 for Rs.50,000/-

I hereby depose that the above stated payment has been made by our company towards participation in the seminar on Risk management & Effective Implementation of Construction Projects held on 6th & 7th October, 2007.

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The Invoice No.109, dated 01/11/2007 of M/s Saket Projects Ltd., Ahmedabad clearly shows that the payment on all-inclusive base has been made towards the advertisement of our company’s name and business and no separate consideration had flown from our company except what has been stated in the ledger, a copy thereof is already given vide our letter dated 20-08-2012 to your office. Further, I also depose that we both the parties have not entered in to any written agreement/ contract since 2007 till date for any transaction whatsoever and we have not made any written memorandum of understanding for any payment made to them. I also depose that the said expenses of advertisement was subjected to TDS under Section 194C with regard to payments for advertisements only.

I also depose that our company did not enter into any sponsorship arrangement with them and hence question of payment of service tax on such payment of Rs.2,50,000/- made by us does not arise at all in view of the provisions of Rule 2 (1) (d) (viii) of the Service Tax Rules, 1994 as a recipient of taxable services.”

It is thus proved without doubt that such services as mentioned in the above invoice pertains to Commercial Training or Coaching Services and not of Sponsorship Services as claimed by M/s Saket.

124. Further, on verification of invoices/ ledger entries/ statements and documents submitted by various service receivers, it was noticed that M/s Saket had wrongly classified their service as “Sponsorship Service” in some of the cases and not paid appropriate service tax on actual service provided by them. It was noticed that they have wrongly classified their service under Sponsorship Service during the F. Y. 2007-08 to 2010-11 in some of the cases and such services are actually either (1) Sale of Space or Time for Advertisement Service or (2) Commercial Training or Coaching Service or (3) Business Exhibition Service. The assessee has also wrongly claimed services in respect of some of the invoices as “Sponsorship Service” in their statement/ worksheet; however on perusal of the relevant invoices, it was mentioned as “Advertisement Service” or “Participation fees/ delegation fees” or “Stall charges”. The said mis-declaration/ mis-statement amounts to Rs.28,78,000/- (Rs.25,20,000/- + Rs.1,50,000/- + Rs.1,50,000/- + Rs.58,000/-) as per details given hereunder:

As per verification of Invoices/ Ledger and not considerable as Sponsorship Service as per party’s claim

Taxable service 2007-08 2008-09 2009-10 2010-11

Sale of Space of Time for Advertisement Services

60,000 -- -- 28,000

Commercial Training & Coaching Services

20,30,000 -- 1,50,000 30,000

Business Exhibition Service 4,30,000 1,50,000 -- --

TOTAL: 25,20,000 1,50,000 1,50,000 58,000

125. I find that M/s Saket also wrongly claimed services in respect of some of the invoices as “Sponsorship Service” in their statement/ worksheet; however on perusal of the relevant invoices when compared with relevant ledgers, it was mentioned as “Advertisement Service” or “Participation fees/ delegation fees” or “Stall charges”. The said mis-declaration/ mis-statement amounts to Rs.3,93,709/- (Rs.1,20,000/- + Rs.28,325/- + Rs.1,27,705/- + Rs.1,17,679/-) as per details given hereunder:

As per verification of Invoices/ Ledger and not taken in to consideration by the party while furnishing information

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Taxable service 2007-08 2008-09 2009-10 2010-11

Sale of Space of Time for Advertisement Services

-- 28,325 1,27,705 1,17,679

Commercial Training & Coaching Services

-- -- -- --

Business Exhibition Service 1,20,000 -- -- --

TOTAL: 1,20,000 28,325 1,27,705 1,17,679

126. I find that M/s Saket have deposed in their statement recorded on 28-07-2012 that so far Sponsorship Services are concerned, the service recipients are required to discharge their service tax liability in view of the provisions of Rule 2 (1) (d) (vii) of the Service Tax Rules, 1994 and hence they have not made payment of service tax in respect of such sponsorship services. However, in case of description as shown in some of the invoices issued by them as discussed hereinabove in previous paras, it has been observed that they are liable to discharge service tax liability as a service provider either under the category of taxable service namely: “Commercial Training & Coaching Service” or “Sale of Space or Time for Advertisement Service”, as the case may be. After detailed verification of the above facts, service tax liability of the assessee in respect of different categories of taxable services has been calculated as per Annexure: I to III attached to the show cause notice.

127. With regard to suppression and time-bar, I find that M/s. Saket had neither obtained registration from the service tax department for the service categories of “Sale of Space or Time for Advertisement services”, “Business Exhibition Services” and Commercial training or Coaching Services” nor declared about the incomes under the head ‘Income from the publication’ and other Incomes, during the period 2007-08 to 2010-11 to the department. They had not paid service tax on due date as required under the provision of Section 68 of the Finance Act, 1994. It was only after the searches and investigation carried out by the Preventive Section conducted by the department which revealed the details of such taxable income. Therefore, I find that the charge of suppression of material facts with intention to evade service tax has been conclusively established. Had the department not conducted the searches and investigated the case, the said taxable value would have escaped assessment and might have resulted in non payment of service tax. M/s. Saket were aware of the facts regarding liability of service tax on the above services provided by them but had not paid or had not disclosed the same to the department. The suppression with an intent to evade payment, on part of M/s. Saket, is proved beyond doubt and proviso to Section 73(1) of the Finance Act, 1994 has rightly been applied in the Show Cause Notice and therefore, by their such act of omission and commission, M/s. Saket have rendered themselves liable for penalty. Further, how the extended period is to be computed has been clarified by various judgments. In this regard, I rely on the decision delivered by Hon’ble Supreme Court of India in the case of appeal filed by the department in the case of M/s Mehta & Co. cited as 2011(264) ELT 481 (SC) where in identical issue was decided reversing the decision of CESTAT. The relevant para is reproduced below:-

“24. The cause of action, i.e., date of knowledge could be attributed to the appellant in the year 1997 when in compliance of the memo issued by the appellant and also the summons issued, the hotel furnished its reply setting out the details of the work done by the appellant amounting to Rs. 991.66 lakhs and at that stage only the department came to know that the work order was to carry out the job for furniture also. A bare perusal of the records shows that the aforesaid reply was sent by the respondent on receipt of a letter issued by the Commissioner of Central Excise on 27-2-1997. If the period of limitation of five years is computed from the aforesaid date, the show

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cause notice having been issued on 15-5-2000, the demand made was clearly within the period of limitation as prescribed, which is five years.”

128. In view of the above, I find that in this case, all essential ingredients existed to invoke the extended period in terms of Section 73(1) of the Finance Act, 1994 to demand the service tax short paid. Thus, the proviso to Section 73(1) of the Finance Act, 1994 was correctly invoked in the Show Cause Notice and is sustainable on limitation.

129. The publications of M/s Saket which are in the nature of business directory or trade catalogues are specifically excluded from the ‘print media’ under Explanation to the definition of “Sale of space or time for advertisement”, selling of space in such publications is chargeable to service tax under the category Sale of space or time for advertisement. I, therefore, hold that the service income of Rs.1,17,86,631- earned by M/s Saket during 2007-08 to 2010-11 is liable to service tax at applicable rate and accordingly, M/s Saket is liable to pay the service tax of Rs.12,98,325/- for the stated period.

130. Further, the commercial training provided by M/s Saket is chargeable to service tax under the category of “Commercial training or Coaching services”. I therefore hold that the service income of Rs. 1,26,55,120/- earned by M/s Saket as Participation Fees/Delegation Fees during 2007-08 to 2010-11is liable to service tax at applicable rate and accordingly M/s Saket is liable to pay the service tax of Rs. 14,16,738/- for the stated period.

131. The services rendered by them in respect of Stall Charges/stall fees received for their exhibitions is chargeable to service tax under the category of “Business Exhibition Services”. I therefore hold that the service income of Rs. 58,45,000/- earned by M/s Saket during 2007-08 to 2010-11 is laible to service tax at applicable rate and accordingly M/s Saket is liable to pay the service tax of Rs. 6,83,633/- for the stated period.

132. I conclude that M/s. Saket had provided service under the category of :

(i) “Sale of Space or Time for Advertisement services” and accordingly demand of service tax of Rs. 12,98,325/- (S.T.: Rs.12,60,507/- + Education Cess: Rs.25,212/- + Secondary & Higher Education Cess: Rs.12,606/-) on total taxable value of Rs.1,17,86,631/- during the period 2007-08 to 2010-11 received by them is required to be confirmed along with interest.

(ii) “Commercial training or Coaching services” and demand of service tax of Rs. 14,16,738/- (S.T.: Rs.13,57,473/- + Education Cess: Rs.27,511/- + Secondary & Higher Education Cess: Rs.13,754/-) on total taxable value of Rs.1,26,55,120/- during the period 2007-08 to 2010-11 received by them is required to be confirmed along with interest.

(iii) “Business Exhibition Services” and demand of service tax of Rs. 6,83,633/- (S.T.: Rs.6,63,720/- + Education Cess: Rs.13,275/- + Secondary & Higher Education Cess: Rs.6,638/-) on total taxable value of Rs.58,45,000/- during the period 2007-08 to 2010-11 received by them is required to be confirmed along with interest.

133. Now I come to the issue of imposition of penalty on M/s Saket under Section 76, 77 and 78 of Finance Act, 1994.

134. M/s. Saket had defaulted in payment of service tax which has been established as not

paid, in accordance with the provisions of Section 68 of the Finance Act, 1994 read with Rule 6 of

the service tax Rules, 1994, and thereby rendered liable to pay mandatory penalty under the

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provisions of Section 76 of the Finance Act, 1994 for default in payment of service tax on time till

the final payment. It has come to my notice that till date they have not paid the service tax, hence

imposition of mandatory penalty under Section 76 is once again justified.

135. Now I come to the issue of imposition of penalty under Section 78 of the Finance Act,

1994. Before going to the merits of the case, I refer to the judgment in the case involving Aircel

Digilink India Ltd. v/s Commissioner of Central Excise, Jaipur, as reported in 2006 (3) STR 386 (Tri.-

Del) and the case involving Bharti Cellular Ltd. v/s Commissioner of Central Excise, Delhi, as

reported in 2006 (3) S.T.R. 423 (Tri.-Del). In both the cases, the Hon. Tribunal upheld invocation of

extended period after taking note of the fact that appellants had not disclosed certain details and

mode of computation in their ST-3 details and that there was nothing on record to suggest that

appellants ever approached the office of the service tax authorities to ascertain the details of their

liability to pay the service tax. Similarly, in case of Insurance & Provident Fund Department v/s.

Commissioner of Central Excise, Jaipur-I, 2006 (2) S.T.R. 369 (Tri.-Del.), Hon. Tribunal held that non-

disclosure of full amount of premium collected would attract invocation of extended period. The

ratio of the above judgments can be applied to the present case also as M/s Saket had kept the

Department in dark about its activities and had not only suppressed the material facts from the

department but has also failed to comply with law and procedures, including payment of service

tax. In view of the above, I hold that in the facts and circumstances of the present case, proviso to

section 73 (1) of Finance Act, 1994, is rightly invoked for raising the demand for service tax against

M/s Saket. As already discussed in above paras, M/s Saket had by taking the shelter that journals

published by them were not in the nature of directories, yellow pages and trade catalogues and

that they were registered with Registration of News Papers, purposefully not declared the income

generated by them from selling of space for advertisement in the ST-3 returns filed by them nor

did they pay any service tax on such services provided by them to their clients. Further, they

deliberately disguised their services as Event Management Services/Sponsorship services in order

to evade payment of service tax. M/s Saket are therefore liable to penalty under Section 78 of the

Finance Act, 1994, as proposed in the SCN.

136. As regard imposition of penalty under Section 77 of the Finance Act, 1994, I find that

M/s Saket has not filed the ST-3 return for the service provided by them under the category of

“Sale of Space or Time for Advertisement” or under Commercial training or Coaching services” or

under “Business Exhibition Services” nor did they pay the Service tax on the gross amount for the

services rendered by them to their clients, also they have till date not paid the service tax due with

interest. I therefore find this case a fit case of imposition of penalty under Section 77 of the

Finance Act, 1994.

137. As regards imposition of simultaneous penalty, I place my reliance on the judgment of

Hon’ble High Court of Kerala in the case of Assistant Commissioner of Central Excise v. Krishna

Poduval as reported at [2006] 3 STT 96 (KER) which is aptly applicable to the present case. I find

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that the imposition of penalty under Sections 76 and 78 of the Act is for non payment of service tax

and suppression of value of taxable service respectively which are two distinct and separate

offences attracting separate penalties. I find that M/s Saket has committed both the offences and

therefore penalties under section 76 and 78 of the Finance Act, 1994 are imposable on M/s Saket

for the period upto 9.5.2008.

138. M/s Saket has pleaded that they should be given the benefit of ‘cum-duty price’ and has

cited the case of M/s Advantage Media Consultants (supra) . While acknowledging the decision of

the hon’ble Apex Court in the matter, I also place reliance on the judgement of M/s Amrit Agro

Industries Limited reported at 2007 (210) E.L.T. 183 (S.C.), wherein the hon’ble Apex Court, on the

issue and applicability of the principle of cum-duty price has held that “…..the assessee will have to

show as to how he has determined the value. What the appellant has really done in the instant case

has to be examined. Whether the price charged by him to his customers contains profit element or

duty element will have to be examined…” I find that in this case, M/s Saket has not shown as to how

they have determined the amount so collected and has simply asked for the benefit, and therefore

I am not inclined to give so.

139. As regards their contention for invoking Section 80 of the Finance Act, 1994 for waiver of

penalty, I find that M/s Saket have not produced any reasonable cause for the failure to pay

service tax. They purposefully not filed the ST-3 returns nor did they inform the department about

their stand. They also did not pay any service tax on the income generated by them for the services

provided by them under the category of “Sale of Space or Time for Advertisement” or under

“Commercial training or Coaching services” or under “Business Exhibition Services”. Further, they

deliberately guised the services provided as ‘Sponsorship services’ and ‘Event Management

Services’ and also wrongly availed the benefit of exemption under Circular No. 64/13/2003-ST

dated 28.10.2003 They have by resorting to these practices evaded payment of service tax.

Therefore, I consider it appropriate to hold M/s Saket liable to penalty under Section 76 and 78 of

the Finance Act, 1994.

140. In view of the above discussions, I pass the following order:

ORDER

(i) I order that the Services provided by them in respect of advertisement in their magazines/ publications/ books/ periodicals be considered as taxable service under the category of “Sale of Space or Time for Advertisement Service” as specified in clause (zzzm) of Section 65 (105) of the Finance Act, 1994 as amended and an amount of Rs.1,17,86,631/- received by them towards providing/ rendering the above stated services be considered as taxable value under the said category of taxable service;

(ii) I confirm the Service Tax amounting to Rs.12,98,325/- (S.T.: Rs.12,60,507/- + Education Cess:Rs.25,212/- + Higher Education Cess:Rs.12,606-) during the F. Y. 2007-08 to 2010-11, on the value as shown in para (i) above, and order

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it to be recovered from them under proviso to Section 73 (1) of the Finance Act, 1994.

(iii) I order that Services provided/ rendered by them in respect of Participation fees/ delegation fees received for their seminars/ conferences be considered as taxable service under the category of “Commercial Training or Coaching Service” as specified in clause (zzc) of Section 65 (105) of the Finance Act, 1994 as amended and an amount of Rs.1,26,55,120/- received by them towards providing/ rendering the above stated services be considered as taxable value under the said category of taxable service.

(iv) I confirm the Service Tax amounting to Rs.14,16,738/- (S.T.: Rs.13,57,473/- + Education Cess:Rs.27,511/- + Higher Education Cess:Rs.13,754-) on the value as hown in para (iii) above, during the F. Y. 2007-08 to 2010-11 be demanded and recovered from them under proviso to Section 73 (1) of the Finance Act, 1994.

(v) I order that the Services provided/ rendered by them in respect of Stall charges/ stall fees received for their exhibitions be considered as taxable service under the category of “Business Exhibition Service” as specified in clause (zzo) of Section 65 (105) of the Finance Act, 1994 as amended and an amount of Rs. 58,45,000/- received by them towards providing/ rendering the above stated services be considered as taxable value under the said category of taxable service

(vi) I confirm the Service Tax amounting to Rs. 6,83,633/- (S.T.: Rs.6,63,720/- + Education Cess: Rs.13,275/- + Higher Education Cess: Rs.6,638/-), on the value as shown in para (v) above, during the F. Y. 2007-08 to 2010-11 be demanded and recovered from them under proviso to Section 73 (1) of the Finance Act, 1994.

(vii) I direct M/s Saket Projects Ltd, 1, PanchsheeL Society, Ushmanpura,Ahmedabad-380015 to pay the interest as applicable on the amount of their service tax liability of Rs. 33,98,696/- under Section 75 of the Finance Act, 1994.

(viii) I impose a penalty of Rs. 200/- (Rupees Two Hundreds Only) per day or at the rate of 2% of the service tax amount per month, whichever is higher, subject to maximum of the outstanding tax amount, from the date on which such tax was due till 09.05.2008 or the actual payment of outstanding tax amount, whichever is earlier, under the provisions of Section 76 of the Finance Act, 1994, as amended, for failure to pay Service Tax within the stipulated period as required under the provisions of Section 68 (1) of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994, as amended.

(ix) I impose a penalty of Rs.10,000/- (Rupees Ten Thousand Only) under

Section 77 of the Finance Act 1994(a) for failing to take registration for other taxable services in accordance with the said provisions or rules made there

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OIO No. 22/STC/AHD/ADC(JSN)/2013-14

under (b) for failure to keep, maintain books of accounts and other documents as required under the provisions of the Finance Act, 1994 or rules made there under (c) for failure to self assess the tax due on the services provided by him.

(x) I also impose a penalty of Rs. 33,98,696/- (Rupees Thirty Three Lacs Ninety Eight Thousand Six Hundred and Ninety Six only) upon them under Section 78 of the Finance Act, 1994 for suppressing the value of taxable services provided by them with an intent to evade payment of service tax. If the service tax amount is paid along with appropriate interest as applicable, within 30 days from the date of receipt of this order, then the amount of penalty under Section 78 shall be reduced to 25% of the service tax amount, provided if such penalty is also paid within such period of 30 days.

(J.S.NEGI) Additional Commissioner

Service Tax, Ahmedabad BY REGISTERED A.D/ HAND DELIVERY

F. No. STC/4-23/O&A/ADC/AE/2012 Date: 28.11.2013

To

M/s Saket Project Ltd, 1, PanchsheeL Society, UsmanpuraAhmedabad-380015.

Copy to:

(1) The Commissioner, Service Tax, Ahmedabad ( Attn: RRA Cell)(2) The Deputy Commissioner (Preventive), Service Tax, Ahmedabad. (Attention:

Superintendent, Preventive Group-V).(1) The Assistant Commissioner, Service Tax, Division-I, Ahmedabad(2) The Superintendent, Range-V, Division-I, Service Tax, Ahmedabad with an extra copy of

the OIO to be delivered to M/s Saket and dated acknowledgement obtained from him.

(3) Guard File.

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