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Issues involved: Interpretation of service tax liability on discounts received by the appellant from media agencies for advertisement bookings.
Summary: Issue 1: Service tax liability on discounts received by the appellant The appellant entered into contracts with clients for arranging advertisements in print and electronic media, receiving a 15% discount on bills from media agencies. The Department contended that the 15% discount should be considered earnings by the appellant, subject to service tax. The Tribunal, considering the appellant's commission ranging from 2.5% to 15%, held that the discount was a pricing mechanism, not a commission paid to the appellant. The actual service charges received by the appellant from clients were deemed taxable, leading to a waiver of pre-deposit and stay on recovery of dues. The Tribunal referred to the decision in McCann Erickson (India) Pvt. Ltd. v. CST, Delhi, supporting the view that the discount received cannot be equated to commission paid to the appellant. Both the appellant's advocate and the Department's representative relied on this precedent. The Tribunal concluded that the discount was part of a pricing mechanism, distinguishing it from the service charges earned by the appellant from clients, which were subject to service tax. In light of the prima facie view that the 15% discount was not a commission but a pricing mechanism, the Tribunal granted a waiver of pre-deposit and stayed the recovery of dues as per the impugned order. The decision clarified the distinction between discounts received from media agencies and service charges earned from clients, ensuring the correct application of service tax liability in the appellant's case.
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