ADWISE ADVERTISING PRIVATE LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS appeal is by the unsuccessful petitioner, whose petition challenging the Letter No. 341/43/96-TRU, dated 31-10-1996, issued by the Central Board of Customs and Excise, New Delhi, was dismissed by the learned Single Judge. The letter, which is in the nature of "departmental instructions", is challenged only insofar as a part thereof is concerned. That part declares that while the amounts paid by the "Advertising Agency" for space and time in getting the advertisements published in the print media like Newspapers, Magazines, Journals, etc. or, the electronic media like, Doordarshan, All India Radio, Private Channels, etc. Will not be includible in the value of the taxable service for the purpose of levy of 'service Tax", however, the commission received by the Advertising Agency from the print media or from the electronic media, as the case may be, would be includible in the value of the taxable service.

(2.) THE main assault against this letter was that firstly, it was contradictory to Section 67(d) of the Finance Act, 1994 (hereinafter referred to as "THE Act") and secondly, that the letter was providing something more and going beyond the real scope of the Act in defining the "Valuation of taxable services" and was as such, bad in law. It was also tried to be suggested that such a circular could not be issued by the Government, which had the effect of enlarging or changing the scope of the main provisions of the Act like Section 67(d) of the Act and that such power to change or enlarge the scope of any provision of the Act existed only in the Parliament and as such, the letter/circular was ultra vires the powers of the Government.

(3.) THE argument is undoubtedly correct. It is a basic principle that the provisions of an Act of Parliament cannot be altered or contradicted or in any manner changed by "Departmental Circulars". However, we would be required to consider this question only if the petitioner/appellant is successful in establishing that the impugned circular/letter had such effect of completely altering the provisions. THE argument by the learned Counsel is that this circular/letter completely changes the scope of Section 67(d) of the Act, which we have quoted above. THE learned Counsel argues that the scope of the provisions of the Act cannot be allowed to be changed. We are in complement with the learned Counsel but, for that the learned counsel would have to establish first that the impugned letter/circular has, in fact, the effect of changing or contradicting or amending the provisions of Section 67(d) of the Act. It will be therefore, be our first endeavour to see as to whether the said letter/circular could be said to have anything contrary to the provisions of Section 67(d) or to any other provisions of the Act or would have the effect of enlarging the scope of Section 67(d) of the Act.