Service tax Liability on Sale of space for advertisement in Magazines, Journals and Newsletters Background Clause (g) section 66D exempts selling of space for advertisement in print media from liability of service tax. Print media is defined in clause 39(a) of section 65 B. It means (i) book as defined in in sub section (1) of section 1 of The Press and Registration of Books Act 1867 (25 of 1867) but does not include business directories, yellow pages and trade catalogues which are primarily meant for commercial purposes (ii) newspaper as defined in sub section (1) of section 1 of The Press and Registration of Books Act, 1867 (25 of 1867). Selling of space for advertisement constitutes a major chunk of revenues of the print media which also includes magazines,journals and newsletter and other similar media. In fact, revenue from advertisements is the lifeline of every publishing house. Any ambiguity with regard to levy of service tax on such revenue can prove to be very costly. It is little ironic that not enough literature and awareness exist in public domain on the subject, which reflects complacency of a sort about the pervasiveness of the exemption across spectrum. On the contrary, some of the books on service tax available in the market declare that with effect from 1.10.2014, selling of space for advertisement by commercial magazines would be subjected to levy of service tax without further elaborating on the basis of such assertion. The purpose of this article is to flag some of the finer nuances of this exemption with a view to raise a level of deliberation and debate on the subject and thus bring eventual clarity. Definitions of Book and Newspaper in PRB Act 1867 The Press and Registration of Books Act 1867 is an act for the regulation of printing presses and newspapers, for the preservation of copies of books and newspapers printed in India and for the registration of such books and newspapers. The definitions in the interpretation section is prefaced with the rider in this act, unless there shall be something repugnant in the subject or context which
essentially means that definition will operate unless subject or context provides otherwise. Definition in the case of book is inclusive definition. It is well known that scope of inclusive definition extends to encompass what is meant by the term in common parlance as well as what is provided by way of specific inclusion whether or not items included fit into the term generally known. Therefore it is important to explore what is meant by book as such and what is the increased scope by way of what are specifically included. What do books mean generally? Free dictionary defines the book as a set of written, printed or blank pages fastened along one side and encased between protective covers. As per the Cambridge dictionary it means a written text that can be published in printed or electronic form. Another meaning given in the said dictionary is set of pages that have been fastened together inside a cover to be read or written in. Oxford dictionary states book to be a written or printed work consisting of pages glued or sewn together along one side and bound in covers. Another variant, in this, of book, is defined as a literary composition that is published or intended for publication as a book. As per Merriam Webster book there are total 9 meaning of the term but the ones of immediate relevance is given in 7 parts to include: (a) A set of written sheets of skin or paper or tablets of wood or ivory (b) A set of written, printed or blank sheets bound together into a volume (c) A long written or printed literarycomposition (d) A major divisions of a treatise or literary work (e) A record of business s financial transactions or conditions (f) Magazine (g) E book. Wikipedia defines that book is a set of written, printed, illustrated or blank sheets made of ink, paper, parchment or other materials fastened together to a hinge at one side. Books may also refer to work of literature or a main division of such a work. In library and information science a book is called a monograph to
distinguish it from serial periodicals such as magazines, journals or newspapers. What are specifically included in The PRB Act 1867 deeming them to be books For the purpose of the said act book includes every volume, part or division of a volume, and pamphlet, in any language, and every sheet of music, map, chart or plan separately printed. It is noteworthy to dissect the definition and magnify each inclusion to understand its significance. The inclusions are: Every volume of a book, in any language, is the book Even the division or part of a volume of a book, in any language, is the book Pamphlet, in any language, is the book Every sheet of music (sheet of music is a written or printed form of music notation that uses modern musical symbols) is the book Map separately printed is the book Chart separately printed is the book Plan separately printed is the book One need to highlight and notice that out of seven fictional inclusions above, last five categories of inclusions would not fit into the traditional meaning of the book given above. Conventionally to be called a book, it has to be set of pages, written or printed, glued or sewn along one side. But the definition given expands far further to include even every sheet of music, plan, chart or map. What are specifically excluded in PRB Act 1867 from the term book? It is equally important to explain what has been specifically excluded and what the true import thereof is. In fact, it is this exclusion which is in root of major confusions and doubts. Over zealots in the department are likely to ride on these to slap liabilities on the assessees. Print media in clause (39a) of section 65 B means (I) book as defined in sub section(1) of section 1 of the Press and Registration of Books Act 1867, but does
not include business directories, yellow pages and trade catalogues which are primarily meant for commercial purposes. Simply put business directories, yellow pages and trade catalogues which are primarily meant for commercial purposes are out of the definition of book and as a result out of definition of print media as well. But the intricate issues, and doubt on their taxability, start tumbling out the moment one attempts to tweak what is simply put above. It is interesting and enlightening, from academics point of view, to look into the possibilities of such tweaking and the implications it results into. This article, theoretically, tries to build some of the possible hypotheses, in the form of case scenario, and then dwell on each one of them. Print media means book as defined in sub section (1) of section 1 of PRB Act 1867 As discussed in this article elsewhere, definition (interpretation as a matter of fact) of book in PRB Act 1867, is done in inclusive manner which generally speaking include (a) what, in common parlance, is meant by book, which is quite comprehensive and large and (ii) what has been specifically included in the book which is specific and restrictive. The inclusive definition as such do not make any distinction between the book which is for commercial purposes and which is not.an interesting question could be to conjecture whether what is specifically included is a class by itself and, in any way, lends any color to the fact that what is to be included in the book generally otherwise? The answers could beboth; yes and no. If the inclusions form a class by itself and it is held that it lends color to what is meant by book, there are possibilities of far reaching consequences and possible unique threats to exemption on this count. What is the scope of phrase but does not include used in clause (i) of clause 39(a) of section 65B The simplest and the most straight of the interpretation of this phrase would be to say that book does not include business directories, yellow pages and trade catalogues. As they say that devil is in details and the real devil emerges when it is read little differently.
Illustration of first of such different reading is like this. As per the definition clause print media means book as defined in sub section 1 of section1 of the PRB Act. It is a kind of legislation by incorporation, whereby the definition of book has been lifted from the PRB Act 1867 and planted in the service tax. But the definition of book in the said act is prefaced with a rider in this act, unless there shall be something repugnant in the subject or context, implication of which is that definition would have contextual modifications/substitution. Question is whether, the rider in the PRB act 1867 will also have application for the purpose of service tax, where the definition is enacted by incorporation. Further, question, incidental to the one before, would be whether, if the subject and context, in service tax demands, whetherthe interpretation of book can be different than what is defined in the PRB act 1867? There can be another very interesting way of looking at this. Book as defined in the PRB Act 1867 has two limbs; one which is meant by book generally and two what has been specifically included. So the definition of media in relation to book would read something like this. When it is stated that print media means to include every volume, part or division of a volume, and pamphlet, in any language, and every sheet of music, map, chart or plan separately printed, does it mean that definition of print media would mean what is only included and would not include what is meant by book generally? Third of such reading could be to ask whether this exclusion belongsto or refers to print media or book? An illustration may help to explain the hypotheses. If it refers to print media then reading of clause (i) of clause 39(a) would be some- what like this; print media means book as defined in sub section(1) of section 1 of The Press and Registration of Books Act 1867, but print media does not include directories, yellow pages and trade catalogues. If it refers to the book then the clause would read like this; print media means book as defined in sub section 1 of section 1 of The Press and Registrations Act 1867 but book does not include business directories, yellow pages and trade directories. What is the significance, reach and implication of the phrase which are primarily meant for commercial purposes The exclusion from the definition of print media in relation to books is made with regard to business directories, yellow pages and trade catalogues which are
primarily meant for commercial purposes. What is reach of the term which are meant for commercial purposes. Does it refer to business directories, yellow pages, or trade catalogues alone or to books or to print media or to all three? First possibility, and substantial one, is that it refers to business directories, yellow pages or trade catalogues and neither to book nor to print media. The state of confusion emerges from a little closer scrutiny and analysis. Business directories, yellow pages and trade catalogues by their inherent nature are meant for commercial purposes and nothing else? If so, is the insertion of phrase meant for commercial purposes is superfluous? It is axiomatic in law that everything stated in law is for a purpose. Where does the search of purpose of this phrase can lead one to? One logical proposition in that case could be that the phrase refers to either book or to the print media? In both the cases and possibilities, consequences would be of different dimensions? If it refers to book, anything that falls in the domain of book and meant for commercial purposes may be not a book for the purpose of this clause. If it refers to print media, then probably everything that is print media and meant for commercial purposes would be not regarded so for the purpose of this clause. There can be an argument that two things are excluded from print media; one business directories, yellow pages and trade catalogues and two anything and everything that is meant for commercial purposes. When business directories, yellow pages and trade catalogues are not defined in the act, what meaning would they take? The Finance Act 1994, in the interpretation clause, does not define the three terms. The PRB Act 1867 also does not define them. As the determination is quite important, one may have to fall back on various sources, nay, allied acts, General clauses act common parlance and technical literature etc. But before one dwells on this subject further, an interesting proposition needed to be underlined. Business directories, yellow pages and trade catalogues which are not meant for commercial purposes, if there is ever one theoretically, would not be excluded from the definition of book or print media. An academic question which is better left here for future pondering? Business directories, yellow pages and trade catalogues, it may be noted, are books not because what has been included in the definition of books in PRB Act 1867 but
because what has not been included in the definition but what is meant by it generally. Wikipedia defines that business directory is a website or printed listing of information in which itlists all business within some categories. Business can be categorized by business, location, activity or size. Business may be compiled either manually or through an automated on line software. Online yellow pages are a type of business directory, as is the traditional phone book. According to Wikipedia definitions of trade catalog vary, but in general, trade catalogs are printed materials published by manufacturing, wholesaling or retailing firms. They promote sales by making advertising claims, give instructions in using products, provide testimonials from satisfied customers and include description of sale products. Newspaper as part of print media According to the PRB Act 1867, Newspapers means any printed periodical work containing public news or comments on public news.this act also defines paper to mean any document, including a newspaper other than a book. ThePRB Act 1867, as it stands now, it must be underlined, talks of two terms, book and newspapers in their broadest of sense and it is within these categories that most of the publications fall in. It would be interesting academically, however, to look into the further distinctions of the above two broad categories as given in The Press and Registrations of Books and Publications Bill of 2013, which has not been enacted (the distinctions may not hold good and may not have any effect as things stand today). As per the said bill: Publication means newspaper, magazines, journals or newspaper printed periodically and published in India including its reproduction in electronic form or any syndication, facsimile editions and Indian editions of periodicals published outside India. Newspaper means a publication of loose folded sheets usually printed on newsprint brought out daily or at least once in a week and includes its reproduction in electronic form.
Book includes every volume, part or division of a volume and pamphlet in any language and every sheet of music, map, chart, or plan separately printed other than newspaper, magazine, journal and newsletter, and has no periodicity. Journal means a periodical publication other than newspaper, magazine or newsletter containing comments or write ups on specific subjects. Magazine means a periodical publicationcontaining comments or write ups on general subjects including public news or comments on public news. Newsletter means a periodical publication brought out by a group or organization or institution to present information to its members or stakeholders, on subjects of common interests. Where do magazines, journals and newsletters stand in this milieu? Are they covered by book or newspaper? This leaves us with a fundamental issue, which is also the soul of this article, where do magazines, journals, newsletter fit in as far as the levy of service tax on revenue from advertisements in them is concerned? Issues, as far as the definition of print media, book and newspaper are given in PRB Act 1867, are: 1. Whether magazines, journals, newsletters are covered by the definition of book or newspaper? 2. If the above are books, will these being periodicals have any effect? 3. If these arenewspapers, whether they would fulfill the requirement to contain public news or comments on public news? What would be the status of those which do not contain public news or comments on public news? 4. What do public news or comments on public news means and constitute? To be covered by the definition of newspapers, following two requirements are to be met: 1. It should be printed periodical work 2. It should contain public news or comments on public news
Without doubt magazines, journals and newsletter meet the first requirement. But only those magazines journals and newsletter which meet the second requirement would fall in the category of newspaper. Magazines, journals and newsletter, whether or not they qualify to be newspaper, may still qualify to be book provided they meet either of the following criteria: 1. It should be either book as meant by it generally or 2. They qualify to be called pamphlet, sheet of music, map, chart or plan separately printed Strictly speaking magazines, journals and newsletter would not qualify in any of the criteria laid down in 2 above but most of them would be book as meant by that term generally. Book as a noun in most of the leading dictionaries is meant set of written, printed or blank pages fastened along one side and encased between the protective covers. One may highlight, however, that when a particular magazine, journal or newsletter qualify to be both as newspapers and book, it should qualify to be one which, as per respective definitions, is most specific and nearest as against general.this is the general rule of interpretation in legal lexicon. It would be appropriate, at this stage, to deal with terms public news or comments on public news. The most commonly understood of news is that news means newly received or noteworthy information especially about recent events. Public, as an adjective, is understood of, relating to, or affecting a population or community as a whole. As per Webster dictionary it means of or relating to, or affecting all or most of the people of a country, state etc. Macmillan dictionary states that public is used for something which: 1 (a) is available for people in general to use (b) That anyone is allowed to watch; listen to or take part in. 2. (a) used about things that most people know about because they are not private or secret
(b) used about plans and situations where other people might see or hear you It is safe to infer that whether a magazine, journal or newsletter is a book or newspaper depends on facts in each case. If these contain public news or comments on public news, most likely they will fall in category of newspaper. Otherwise, these would fall in the category of book, barring cases of business directories, yellow pages and trade catalogs which have been excluded from the definition of print media. Conclusion The central issue in this article was levy of service tax on advertisement revenue from magazines, journals and newsletter, especially which fall in the category of commercial ones. Detailed analysis and scrutiny above, leads one to believe that such revenue is not liable to service tax, these being book or newspapers and therefore print media. Only exceptions would be business directories, yellow pages and trade catalogs which are carved out from print media and eventual from exemption. It would be interesting to get a counter view to this and till then jury is still out on the subject.