2018 (6) TMI 1158 - AT - Service Tax

Valuation - Advertising agency services - inclusion of amount of discount extended by the broadcaster, in the value of the advertisement of slot billed to the customers - Held that - An identical issue had already been considered by the Tribunal in the case of Mccann Erickson India Pvt. Ltd. 2008 (1) TMI 137 - CESTAT NEW DELHI in which it has been held that the 15% discount extended by the broadcasters cannot be included for the purpose of charging service tax under the category of advertising agency from the clients - appeal allowed - decided in favor of appellant.

Summary

Issues: Challenge to Order-in-Original regarding service tax on discounts received from broadcasters for sale of advertisement time slots.

Analysis:

The Appellate Tribunal CESTAT NEW DELHI dealt with an appeal challenging Order-in-Original No. 05/2015 dated 30.01.2005. The appellant, engaged in advertising agency services, also sells advertisement space booked with broadcasters for telecast. The appellant receives a 15% discount from broadcasters for time slots, marking up rates by 2-4% when billing customers. The Revenue demanded service tax on the discount amount given by broadcasters, leading to a Show Cause Notice in 2013. The impugned order confirmed a service tax demand of &8377; 1,38,24,069/- for the period 2008-09 to 2012-13, including interest and penalties under the Finance Act, 1994. The appeal challenged this order.

The arguments presented by the appellant included that they had already paid service tax on the difference between amounts billed by broadcasters and customers, treating it as agency commission. They contended that adding the discount amount was unjustified as it was not recovered from customers nor paid to broadcasters. Citing case laws like Kohinoor Publicity Commissioner of Central Excise Jaipur-I-2017, Lintas India Pvt. Ltd., and Mccan Erickson (India) Pvt. Ltd., the appellant argued against the inclusion of the discount amount. They also disputed the Revenue's reliance on the CBEC Circular dated 18.10.2001.

The Revenue, represented by the Ld. DR, supported the impugned order. However, after hearing both sides and examining the records, the Tribunal referred to a previous decision in the case of Mccann Erickson India Pvt. Ltd. where it was held that the 15% discount from broadcasters cannot be included for service tax purposes under the advertising agency category. The Tribunal emphasized that service tax is payable on the actual amount received, considering the commission retained by the appellant. Consequently, the impugned order was set aside, and the appeal was allowed on 19.06.2018.