Service Tax Payable On Service Charges Collected From Client For Printing: CESTAT
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that service tax payable on service charges collected from client for printing.
The Bench of Dr. Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that the assessee engaged someone else to do the job of printing after preparing content using its in-house expertise. The assessee was, by no stretch of imagination a job worker to a printer. The printer, in fact, was the assessee’s sub-contractor. The assessee is liable to pay service tax on the service charges which it had collected from the client departments towards printing work but only within the normal period of limitation.
In this case, the assessee/appellant was created as an associate organization of the Department of Public Relations, Government of Chhattisgarh to provide multi-media advertising and publicity for various schemes of that Government.
The assessee invoices the client department for a consolidated sum towards the amounts charged by the empanelled agencies, service tax on their services and 10% or 15% as its service charges and service tax on its service charges. The assessee collects the entire amount and pays the empanelled agencies for their services.
The assessee’s records were audited and the department observed that the assessee had not paid service tax on certain services which it had rendered and also that it had collected certain sums from the clients as representing service tax but did not deposit the amounts as service tax. A show cause notice has been issued to the assessee.
The bench observed that the entire demand in this case is of service tax on sale of space for advertisements prior to 2014 and the assessee had been paying service tax from 2014. If that be so, the demand on this count cannot be sustained and needs to be set aside subject to verification by the Commissioner.
The Tribunal after evaluating notification no. 25/2012-ST dated 20.6.2012 observed that “what is exempted under this notification is any intermediate production process as job work in relation to printing. What the appellant did is not a job work. It had contracts from the client departments contracts for getting the brochures, manuals, etc. printed. It engaged someone else to do the job of printing after preparing content using its in-house expertise. The appellant was, by no stretch of imagination a job worker to a printer. The printer, in fact, was the appellant’s sub-contractor. Therefore, the appellant’s service is clearly not covered by this exemption notification.”
The assessee is liable to pay service tax on the service charges which it had collected from the client departments towards printing work but only within the normal period of limitation, added the bench.
In view of the above, the Tribunal partly allowed the appeal and set aside the demand for extended period of limitation and penalty.
The bench stated that the demand of service tax on selling of space for advertisements is payable only after 2014 and according to the appellant, the entire demand under this head is for the period before 2014.
Case Title: M/s Chhattisgarh Samvad v. Principal Commissioner
Case Number: SERVICE TAX APPEAL NO. 51826 OF 2017
Counsel for Appellant/ Assessee: A.K. Batra
Counsel for Respondent/ Department: Anand Narayan
