2017 (9) TMI 785 - AT - Service Tax

Advertisement services - commission - taxability - case of appellant is that they did receive 15% of the commission from news papers and print media for providing service to advertisers, and they passed 10% to 12% from the commission received to their advertisers/customers and retained only 3% to 5% which is their consideration, and on the said consideration only service tax is leviable - Held that - the Tribunal in the case of CST, Ahmedabad Vs. Poornima Advertising & Promotion Pvt. Ltd. 2009 (11) TMI 456 - CESTAT, AHMEDABAD has held that Service tax liability arises only on the actual amount collected by the appellants and not on the full discount received by them from the advertising agency, from news paper or the media . Appellant are given one more opportunity to provide evidence substantiating the fact that they retained only 3% to 5% of commission received from the newspaper agency or printing media. Once it is substantiated by documentary evidence, the service tax will be charged only on the retained amount of 3% to 5%, which is actual consideration for advertisement services provided by the appellant - appeal allowed by way of remand.

Summary

Issues:
Appeal against demand of service tax confirmed by Commissioner (Appeals) - Appellant's contention on service tax calculation based on commission received - Lack of evidence provided by the appellant - Tribunal's decision on service tax liability based on actual amount collected - Remand of the matter to adjudicating authority for further proceedings.

Analysis:
The case involved an appeal by M/s. Kohinoor Publicity against the confirmation of a service tax demand by the Commissioner (Appeals). The appellant contended that service tax should only be levied on the amount they retained from the commission received for providing advertisement services. However, the appellant failed to provide any evidence to support their claim that they retained only 3% to 5% of the commission. The Tribunal referenced a previous case, Poornima Advertising & Promotion Pvt. Ltd., where it was held that service tax liability arises only on the actual amount collected by the service provider, not on the full discount received from advertising agencies or media. The Tribunal emphasized the importance of substantiating the claim of retaining 3% to 5% and granted the appellant another opportunity to provide documentary evidence to support their contention.

The Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for further proceedings. The adjudicating authority was directed to provide the appellant with an opportunity for personal hearing and submission of relevant documents. Once the appellant substantiates with evidence that they retained only 3% to 5% of the commission received from newspaper agencies or print media, the service tax will be charged based on the actual consideration for the advertisement services provided by the appellant. The appeal was allowed by way of remand, providing the appellant with a chance to support their claim with proper documentation and have the matter re-evaluated by the adjudicating authority.