2018 (2) TMI 646 - AT - Service Tax

Liability of service tax - discounts/commissions/incentives from various Print Medias - Advertisement Agency Service - Held that - Discount given by the Print Media are not related to the gross amounts received from the service recipient and as such cannot be held to be taxable - reliance placed in the case of Mccan Erickson (India) Pvt. Ltd. vs. Commissioner of Service Tax, Delhi 2008 (1) TMI 137 - CESTAT NEW DELHI - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether discounts/commissions/incentives received by an advertising agency from Print Media are liable to service tax.

Analysis:
The appellant, registered under the category of Advertisement Agency Service, received discounts/commissions/incentives from Print Media while providing services. The Revenue contended that such discounts were liable to service tax, leading to a demand against the appellant. The Authorities below confirmed this demand.

The Tribunal referred to the case of Mccan Erickson (India) Pvt. Ltd. vs. Commissioner of Service Tax, Delhi, which established that discounts/commissions received from Print Media by an advertising agency should not be considered as amounts received from clients. The Tribunal concluded that discounts given by Print Media are not linked to the gross amounts received from service recipients and, therefore, should not be taxable.

Based on the precedent set by the Mccan Erickson case, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant. This decision provides consequential relief to the appellant, resolving the issue of whether discounts/commissions/incentives received from Print Media are subject to service tax.

This judgment clarifies the taxability of discounts/commissions/incentives received by advertising agencies from Print Media, establishing that such amounts are not taxable under service tax laws. The decision aligns with existing legal precedents and provides a clear interpretation of the tax treatment of discounts in the advertising industry.