service tax on advertisement introduce on 1st nov 1996

ADVERTISING AGENCY SERVICES
Effective date: 1st November 1996.
Definitions:
“Advertisement” includes any notice, circular, label, wrapper, document, hoarding or any
other audio or visual representation made by means of light, sound, smoke or gas.
“Advertising agency” means any person engaged in providing any service connected
with the making, preparation, display or exhibition of advertisement and includes an
advertising consultant.
Scope of taxable service shall include any service provided or to be provided to a client,
by an advertising agency in relation to advertisement, in any manner.

♦ Activity of printing and publishing Telephone Directories, Yellow Pages or Business
Directories does not attract service tax since such activity is essentially of printing
readymade advertisement from the advertisers and publishing the same in the
directory which are similar to the activities carried out by newspapers or periodicals.
However, any activity relating to making or preparation of an advertisement, such as
designing, visualising, conceptualising, etc., will be liable to service tax.
♦ When the term ‘canvassing’ includes service of 'space selling' which merely involves
contacting potential advertisers and persuading them to give advertisement to a
particular newspaper/periodical/magazine, it would not be subject to service tax
because it does not entail any further activity relating to making and preparation of
the advertisement namely, drafting of the text etc. These tasks are left either to the
advertiser or to newspaper/periodical/magazine.
♦ The term 'canvassing' would fall within the phrase 'any service provided in any
manner connected to making preparing, displaying and exhibiting' and would be a
taxable service when it involves a space selling agency approaching a customer,
receiving the texts of the advertisement (including photographs, monograms etc. of
the customs), estimating the space that such advertisement would occupy in the
newspaper/periodical/magazine, negotiating the price, informing the general layout of
the advertisement that would finally appear in such newspaper etc.
♦ Cinema theatres cannot be treated as advertisement agencies as they project
advertisement only on behest of advertising agencies.