“Sale of advertising space and time” cannot be classified as BAS Serviceprior to its implementation.

PJ/Case Law/2013-14/2081

Case:- COMMISSIONER OF CENTRAL EXCISE, MUMBAI Vs EBAY INDIA PVT LTD

Citation:- 2014-TIOL-243-CESTAT-MUM

Brief facts:-Revenue is in appeal against Order-in-Original no. 15/STC/SJS/07-08 dated 05/11/2007 passed by the Commissioner of Service Tax, Mumbai. Bazee Com (India) Pvt. Ltd. are engaged in providing e-commerce transaction services through web site which facilitates sale and purchase of goods over internet and they were charging a commission from sellers for successful e-commerce transactions. In addition, they were also charging a “listing fee” towards “banner advertising” on the web site wherein the advertisements were flashed on the web site without any creative work involved. The department was of the view that the activity undertaken by the appellant would be eligible to service tax under the category of online data access and/or retrieval service as defined in Section 65(105)(zh) of the Finance Act, 1994 and accordingly, a show-cause notice dated 27/01/2005 was issued to the appellant demanding service tax of Rs.80,85,217/- for the period July 2001 to August 2004. The said notice was adjudicated vide the impugned order wherein the Commissioner held that the services undertaken by the appellant are classifiable under Business Auxiliary Services (BAS) and they have to discharge service tax under the said category with effect from 01.07.2003 on the commission received by them. However, on the “listing fees”, the adjudicating authority held that they cannot be classified as BAS and would be more appropriately covered under “sale of advertising space and time service” which came under the tax net with effect from 01/07/2006. Accordingly, he dropped the demand on the consideration received under the category of listing fees. Aggrieved of the same, the Revenue is before the Tribunal.

Appellant’s contention:-The appellant, in the appeal memorandum filed, urged that the listing fees charged by the appellant would come under the category of BAS for the period prior to 01/05/2006 and with effect from 01/05/2006, the same shall be covered under “sale of advertising space and time service” and accordingly, the adjudicating authority should have confirmed the service tax demanded on listing/banner charges.

Respondent’s contention:-The respondent has sought adjournment of the case on the ground that they did not receive the notice. However, from the request for adjournment itself very clear that they are aware that the case is listed for hearing. It is the fifth time the case is coming up for hearing. Therefore, they are not inclined to adjourn the hearing as requested by the respondent.

Reasoning of judgment:-Having carefully considered the submissions urged by the Revenue in their appeal memorandum and reiterated by the ld. AR. As per the appeal memorandum, service is classifiable under “sale of advertising space and time”. However, the appeal memorandum seeks to classify the said services under BAS prior to 01/05/2006. This contention of the Revenue is contradictory. If the service is classifiable under “sale of advertising space and time” with effect from 01/05/2006 which is a totally different service and which has not been carved out of BAS, the Revenue cannot contend that the same should be classified under BAS prior to 01/05/2006. It is a settled position of law that when the new entry is created so as to bring the activity under the category of taxable service, it is implied that the said activity was not taxable prior to inception of the new entry. Therefore, they do not find any merit in the Revenue's appeal. They also observe that in the show-cause notice issued to the noticee, the classification of the activity under BAS has not been raised at all. In view of the above analysis, we do not find any merit in the appeal and accordingly dismiss the same.

Decision:- Appeal dismissed.

Comment:-The gist of this case is that the service of “sale of advertising space and time” can not be considered as BAS Service prior to its introduction in service tax net as it is a settled position that a service cannot be classified under some other category prior to its levy.

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PJ/Case Law/2013-14/2081

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