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2008 (6) TMI 66 - AT - Service TaxAppellants received commission from the print media for the sale of space for advertisement for their clients appellant acting as agent - appellant not paid service tax on the price money collected from the said clients for such sale in view of Circular F. No. 332/4/2008-TRU, an advertising agency acting as intermediary between print media and advertisers need to pay service tax only on the commission collected - strong case of appellants stay granted
Issues: Service tax demand on advertising agency for not paying tax on price money collected from clients for advertisement space sales.
Analysis: The case involved a service tax demand on the appellants, an advertising agency, for not paying tax on the price money collected from clients for the sale of advertisement space. The Commissioner had demanded over Rs. 76.00 lakhs as service tax along with Education Cess and imposed a penalty under relevant sections of the Finance Act, 1994. The demand was related to the period from April to December 2006 and fell under the category of 'Advertising Agency' as per Section 65(105)(e) of the Finance Act. The appellants had paid tax on the commission received from print media but not on the price money collected from clients for advertisement space sales. The appellants argued that a recent circular from the Ministry of Finance clarified that an advertising agency acting as an intermediary between print media and advertisers needed to pay tax only on the commission collected from the print media. Relying on this circular, the appellants contested the demand of service tax, penalty, and interest imposed by the Commissioner. After hearing both sides, the Tribunal found merit in the appellants' case and granted waiver of pre-deposit and stay of recovery concerning the service tax, interest, and penalty amount. The Tribunal's decision was based on the strong case made by the appellants supported by the recent circular from the Ministry of Finance, which clarified the tax liability of advertising agencies acting as intermediaries in the sale of advertisement space.
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