Whether magazine for fertilizer industry be treated as newspaper so as to exclude leviability of service tax?

PJ-Case law-2013/14-1599

Case:- M/s FERTIPLANT ENGGCO PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIGAD

Citation:- 2013 –TIOL -748-CESTAT-MUM

Brief Facts:-The appeal and stay application are directed against the Order-in-Appeal no. S/419/RGD/2012 dated 28.06.2012 passed by the Commissioner of Central Excise (Appeals), Mumbai-II.

The Appellant, M/s Fertiplant Engg. Co. Pvt. Ltd. are manufacturer of machinery used in fertilizer industry. They placed an advertisement for their machinery in a magazine, called “Fertilizer Focus” which is published in UK. The department was of the view that for the consideration paid by them for putting out the advertisement in the foreign magazine, the appellant is liable to discharge Service Tax under the category of “Sale of space or time for advertisement” services and accordingly, a demand of Service Tax amounting to Rs.32,642/- was confirmed along with interest thereon and also imposing penalties under sections 76, 77 and 78 of the Finance Act, 1994. The appellant preferred an appeal before the lower appellate authority, who dismissed the appeal. Hence, the appellant is before Tribunal.

Appellant Contentions:-The appellant submitted that as per definition of “Sale of space or time for advertisement” under section 65(105)(zzzm), it specifically excludes sale of space for advertisement in Print Media and since the magazine is a print media, they are not liable to pay any Service Tax. The term ‘Print Media' has been defined under Section 65(105)(zzzm), as a ‘Newspaper' defined under section 1(1) of the Press and Registration of Books Act, 1867 and as per the said Act “newspaper” means any printed periodical work containing public news or comments on public news. Therefore, the said magazine comes under the category of ‘Print Media' as provided for in the law. The learned counsel also submits that if the Service Tax is levied, they would be eligible for availing credit thereon under the category of input services and, therefore, the entire transaction is revenue neutral. He also submits that the demand is time barred as the show-cause notice has been issued on 07.01.2011 for the period 2006-07 and 2007-08. Accordingly, he prays for grant of stay.

Respondent Contentions:- The Respondent submits that the magazine “Fertilizer Focus” is mainly circulated amongst the people engaged in fertilizer industry and does not have any news value for the general public. Therefore, it does not qualify as newspaper. Accordingly, he submits that the appellant be put to terms.

Reasoning of Judgment:-We have considered the submission from both parties and perused the record, we find that the definition of ‘newspaper' as defined under the Press and Registration of Books Act, 1867 is wide enough to cover any periodical work containing public news and comments on public news. In the instant case, the magazine is published once in two months and it is a printed periodical work. The magazine publishes news pertaining to fertilizer industry and advertisement of the said industry and contains articles on research work which is going on and the statutory provisions relating to the said industry. Since the scope of magazine is specific, it will be mainly of interest to public connected with that industry. Public connected with the industry would include a large number of the public such as fertilizer users, manufacture of fertilizers, farmers, scientists and all others whoever is interested in that field. They are as much part of the general public as anybody else and, therefore, we are prima facie of the view that the impugned magazine is a newspaper as defined in the law.

In any case, the transaction is revenue neutral, inasmuch as the appellant could have taken credit of the Service Tax paid on the transaction as promotion or marketing of the goods come within the purview of input services as defined in rule 2(l) of the CENVAT Credit Rules, 2004. Thus, the appellant has made out a strong prima facie case in their favour for grant of stay.
Accordingly, we grant unconditional waiver of pre-deposit of the dues adjudged against the appellant and stay recovery thereof during the pendency of the appeal.

Decision-: Stay application allowed.

Comment:-The analogy drawn from this case is that the magazine published for the fertilizer industry would be treated at par with newspaper, i.e. print media so as to exclude it from the purview of service tax as this magazine is also meant for the public at large who are interested or are in any way connected with the field of fertilizers.

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PJ-Case law-2013/14-1599

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