2009 (11) TMI 218 - AT - Service Tax

Advertising agency- The assessee was engaged in booking of space or time in media. Whenever a request was received, it simply booked the space in the newspaper or booked the time in the media, collected service charges and paid the said amount to the media or newspaper. The assessee got a discount from the media/newspaper and passed on a portion of the same to the clients and retained balance as its remuneration for the services provided by it. However the assessee paid service tax on the full gross amount billed by them to media without considering the discount of 12% received from the media or newspaper. Subsequently, the assessee filed a refund claim. The adjudicating authority rejected the refund claim of the assessee on plea of unjust enrichment on ground that the tax collected from clients was not refunded. The Commissioner (Appeals) held that the service provided by the assessee was not advertising agency s service, the assessee was eligible for refund claim. Held that- it is well settled that service tax is payable only on the actual amount received by the service provider. Therefore the Commissioner (Appeals) was justified in deciding the issue in favour of assessee. Therefore, the appeal filed by the revenue deserved to be rejected and the appeal filed by the assessee was to be allowed.

Summary

Issues:
1. Eligibility for refund claim based on service tax paid on full gross amount billed without considering discount.
2. Classification of service provided by the appellant under service tax laws.
3. Limitation under section 11B of the Central Excise Act, 1944 for refund claims.
4. Unjust enrichment clause in refund claims.
5. Determination of service tax liability on the actual amount collected by the appellant.

Analysis:

Issue 1:
The appellant, engaged in providing advertisement services, filed a refund claim for excess service tax paid on the full gross amount billed without considering a discount offered to clients. The Commissioner (Appeals) upheld the eligibility for a refund claim based on merits, but rejected it on the grounds of unjust enrichment.

Issue 2:
The classification of the service provided by the appellant was disputed by the Revenue, arguing that it extended beyond advertisement services. However, the Tribunal found that the service provided by the appellant was limited to booking space or time, as clarified in the master circular issued by the Board, thereby rejecting the Revenue's appeal on classification.

Issue 3:
The refund claim amounting to Rs. 13,73,910, pertaining to service tax paid before a specific date, was challenged under the limitation set by section 11B of the Central Excise Act, 1944. The appellant's advocate accepted this contention, leading to the withdrawal of this issue.

Issue 4:
The Tribunal considered the unjust enrichment clause in refund claims, emphasizing the issuance of credit notes by the appellant as sufficient evidence for claiming a refund. Precedent decisions and clarifications by the Board supported the appellant's position, leading to the rejection of the unjust enrichment argument.

Issue 5:
Regarding the determination of service tax liability, the Tribunal clarified that the liability arises only on the actual amount collected by the appellant, not on the full discount received from advertising agencies, newspapers, or media. This interpretation aligned with previous Tribunal decisions, further supporting the appellant's case.

In conclusion, the Tribunal rejected the Revenue's appeal while allowing the appellant's appeal. It was clarified that the rejection of the Revenue's appeal did not validate the time-barred refund claim, which had been acknowledged as such by the appellant's advocate.