2017 (5) TMI 101 - AT - Service Tax

Valuation - advertising agency service - discount on the gross value of media time/space - commission - role of the appellant as a pure agent - Held that - the appellants have fulfilled all the conditions of a pure agent acting on behalf of M/s Dabur - the appellants being an advertising agency and a pure agent is not liable to pay service tax on amount payable to media companies on behalf of their clients - The commission received by the appellant only would be chargeable to service tax. CENVAT credit - denial on the ground of improper documentation - invoices were addressed to unregistered premises of the appellant - Held that - The denial of credit is only with reference to address in the document - in various decisions, this Tribunal held that the credit cannot be denied on this reason - credit allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Service tax liability on reimbursed amount received by the appellant from clients towards media cost.
2. Denial of Cenvat credit due to improper documentation.

Analysis:

Issue 1: Service tax liability on reimbursed amount
The appellants acted as agents for their client, placing advertisements in media where broadcasters offered discounts on the gross media cost. The dispute centered around the service tax liability of the reimbursed amount received by the appellant from clients towards media cost. The Commissioner's order confirmed a substantial service tax demand and imposed penalties. However, the appellant argued that similar demands for subsequent periods had been dropped by the Commissioners, citing a specific Board Circular and a decision by the Hon'ble Madras High Court. The Circular clarified that the amount paid by the advertising agency for media space and time should not be included in the taxable service value, while the court decision supported that payments to media companies should not add to the taxable value of the advertising agency's services. The Tribunal concurred with these arguments and found no merit in confirming the service tax liability against the appellant, given the previous decisions in their favor.

Issue 2: Denial of Cenvat credit
Regarding the denial of Cenvat credit due to invoices being in the name of unregistered premises, the appellant contended that there was no dispute about the credit's eligibility, only about the invoicing address. The Tribunal noted that previous decisions had held that credit cannot be denied solely based on the address in the document. Citing precedents and the appellant's own successful challenge on the same issue for a later period, the Tribunal found the denial of credit unjustified. Consequently, the Tribunal deemed the impugned order unsustainable and set it aside, allowing the appeals of the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, dismissing the service tax liability and overturning the denial of Cenvat credit, emphasizing compliance with legal provisions and precedents in reaching its decision.