2005 (10) TMI 6 - AT - Service Tax

Advertising Agency - commission received equal to 15%. Out of the commission received, rebate / discount given to customers.

Summary

Issues:
Whether Service Tax is payable on the amount retained by the advertising agency or on the actual commission earned by them.

Analysis:
The appellant, an advertising agency, appealed against the order-in-appeal passed by the Commissioner (Appeals) regarding the Service Tax charged by the Revenue on the amount retained by the appellant. The appellant argued that they do not retain 15% of the gross amount received from customers; instead, they pay 85% to newspapers and give the remaining 15% as rebates to customers. They contended that Service Tax should only be payable on the actual commission earned, not on the amount retained. The Revenue, however, presented cash memos showing that the appellant received commissions at a rate of 15% from customers, with no mention of rebates or incentives. The appellant did not provide evidence to support their claim of giving rebates. The Tribunal found no issue with the order confirming the demand for Service Tax on the commission earned by the appellant as an advertising agency. The penalty imposed was reduced due to the nature of the case revolving around the quantum of the amount subject to Service Tax.

In conclusion, the Tribunal upheld the order confirming the Service Tax demand on the commission earned by the advertising agency. The penalty was reduced, considering the circumstances of the case. The decision clarified that Service Tax is payable on the commission earned by the agency, as evidenced by the cash memos showing the 15% commission received from customers. The lack of evidence supporting the appellant's claim of providing rebates led to the dismissal of their argument.