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Liability of sub-contractor — Writing contents of advertising material for advertising agency — Not liable since Service tax paid by advertising agency — Certificate produced to show payment of tax by principal was not considered — Matter remanded.
Facts:
The appellants were engaged in work related to conceptualisation and writing contents of advertisement such as advertising films, print-ads, which was used by another service provider for production of final advertisement material. The period involved was May, 2001 to June, 2003 for which the Department had confirmed recovery of service tax from the appellants as advertisement consultant.
The appellant referred to Board’s Circular dated 23-8-2007, wherein it stated that a taxable service which is intended for use by another service provider does not alter the taxability of service provided. However, even if the appellant is held to be liable, liability would arise only from the date when Circular was issued. Apart from this, she further stated that service tax was required to be paid only when sub-contracting was for a different service category. However, the appellants were not providing any such service. Additionally, she had also produced a certificate that the tax had been paid by the service provider; however, the same was overlooked by the lower authorities.
The Revenue argued that the appellant was working on retainership basis and the relationship between service provider and the appellant was that of principal-to-principal. Moreover, the definition of advertising agency which is an inclusive definition also covers advertising consultants within the ambit.
Held:
In case the appellant was required to pay service tax, it would amount to taxing the same service twice. Furthermore, liability to pay tax lies with the service provider who actually provides the service and not with the sub-consultant. Thus, the case was remanded to the lower authorities in order to reconsider the certificate produced by the appellant.
Note:
On the same lines, the Mumbai Tribunal passed the same order on similar facts in the case of (2011) 22 STR 161 (Tri.-Mumbai) — Neil Enterprises v. Commissioner of Service Tax, Mumbai.
