2023 (9) TMI 929 - AT - Service Tax

Eligibility of 85% abatement - advertising agency - revenue is of the view that the assessee is availing 85% exemption on the value of taxable service from payment of service tax without any authority of law during the impugned period and also not incorporated the entire value of taxable service in their ST-3 return as detected from their profit and loss accounts resulting in non-payment of service tax - HELD THAT - The facts of the case are not in dispute that the assessee is advertising agency and providing service in relation to the advertisement for print media and paying service tax on 15% of the total amount of commission received by them. The said issue has been decided by this Tribunal in the case of DRISHTY COMMUNICATION PRIVATE LIMITED VERSUS C.C.E. S.T. -RAJKOT 2023 (1) TMI 297 - CESTAT AHMEDABAD wherein the Tribunal observed that It is seen that no evidence has been placed from record to establish that the appellant were providing Advertising Agency Services. The role of appellant was limited to being an intermediary in the sale of space/ time for media agency on commission basis. In terms of Notification No.1/96-ST the assessee is not liable to be included the amount paid for space and time in getting the advertisement published in print media. Therefore the said amount is not includible in the value of taxable service provided by the assessee. Further on discount received by the appellant no service tax is payable as the same has not been received in consideration of providing the taxable service by the appellant. It was further found that the advertisers themselves have paid service tax on behalf of the appellant therefore if the same is demanded from the assessee it would be double taxation on the service - As in the case in hand the service tax has been paid by the advertisers on behalf of the appellant therefore same is treated as paid by the appellant. Accordingly no demand is sustainable against the appellant. On the services provided by the appellant to the Government the appellant is liable to pay service tax - The assessee is liable to pay service tax on the services provided to the Government of India and Rest of the demand against the assessee are set aside. The appeal filed by the assessee is partly allowed.

Summary

Issues involved:
The judgment involves the common issue of service tax liability for an advertising agency, specifically regarding abatement, payment on behalf by advertisers, service provided to government agencies, and taxation on discounts received.

Abatement of 85% and Service Tax Demand:
The appellant, an advertising agency, earned commission on advertisements and claimed 85% abatement on the taxable service value. The revenue disputed this abatement and issued show cause notices for service tax demand and penalties. The Tribunal found that the appellant was not liable to include the amount paid for space and time in the taxable service value, as per Notification No.1/96-ST. The demand was set aside based on a previous Tribunal decision and CBEC clarification.

Payment on Behalf and Double Taxation:
Regarding service tax paid on behalf by advertisers, the Tribunal referred to a case where the appellant appointed an agent to receive payments and discharge service tax liability. The Tribunal held that if advertisers paid service tax on behalf of the appellant, demanding the same from the appellant would result in double taxation. The demand against the appellant was not sustainable in this regard.

Service to Government Agencies:
The appellant claimed exemption from service tax for services provided to government agencies. However, the Tribunal held that the services provided to the government were not exempt from service tax. Citing relevant definitions and circulars, the Tribunal concluded that the appellant, as an advertising agency, was liable to pay service tax on services provided to the government. The appeal was partly allowed, with the appellant being liable to pay service tax on government services.

Conclusion:
The judgment addressed the issues of abatement, service tax demand, payment on behalf by advertisers, and taxation on services provided to government agencies for an advertising agency. The Tribunal upheld certain exemptions and set aside demands based on legal interpretations and precedents, resulting in a partial allowance of the appeal and dismissal of the revenue's appeal.