2014 (1) TMI 1143 - AT - Service Tax

Stay application - Waiver of pre deposit - Advertising agency service - Held that - there is no dispute about the execution of the agreement as also providing of advertisement service to GRP M to the ultimate client. It is only reading of the agreement by which the Revenue has developed the argument that the entire services of advertisement were being provided by the appellant and the consideration was being routed through GRP M. As per the appellant M/s. GRP M is charging full amount from their client and is only passing a part amount to the appellant as a consideration for their creative inputs in which case the interpretation of the agreement by the Revenue cannot prima facie be sustained - Revenue cannot act against their own Board s circular No. F. No. 341/43/96-TRU, dated 31-10-1996 which are in favour of the assessee. We also prima facie find favour with the appellant on plea of limitation - Stay granted.

Summary

Issues: Interpretation of service tax liability on commission received by an advertising agency for providing creative inputs to another agency. Applicability of definition of 'advertising agency' and relevant circulars. Contention regarding limitation period for demand proceedings.

Analysis:
1. The appellant, an advertising agency, received commission for providing creative inputs to another agency through a tripartite agreement. Revenue treated the commission as consideration for providing advertising agency services, leading to demand proceedings.

2. The appellant argued that they did not directly provide advertising agency services to clients, and the main contractor had paid Service Tax. They highlighted the definition of 'advertising agency' and a withdrawn circular supporting their stance.

3. The Revenue contended that the appellant effectively provided advertising services to clients through the agreement, with consideration routed through the main contractor. They disputed the limitation argument, stating non-disclosure of Service Tax non-payment.

4. The Tribunal noted the agreement's execution and service provision to the main contractor's clients. The Revenue's interpretation was questioned, as the main contractor charged the full amount and passed a portion to the appellant for creative inputs. The appellant's assertion of full Service Tax payment by the main contractor was considered, along with the relevant circular supporting them.

5. Ultimately, the Tribunal found in favor of the appellant, dispensed with pre-deposit conditions, and stayed the recovery of duty and penalty during the appeal period. The decision was based on the interpretation of the agreement, Service Tax payment by the main contractor, and the applicability of the Board's circular.

6. The stay petition was allowed in favor of the appellant, emphasizing the points discussed and the Tribunal's decision to dispense with pre-deposit conditions.