2018 (9) TMI 1070 - AT - Service Tax

Business Auxiliary Service or not - Advertising Services - taxability of amount of Discount received - promoting business of the media and for which he is receiving commission - Held that - In many cases the assessee passed on a portion of the discount received to respective clients and the service tax was remitted by the assessee on the amount retained. In this scenario therefore there is no service-provider service-receiver relationship between the assessee and the media and therefore the finding of the lower appellate authority that the media is not the customer of the assessee nor could the assessee be considered as a commission agent of the media is agreed upon - the assessee is not liable to pay service tax on the discount received under BAS - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Demand of Service Tax under Business Auxiliary Service
2. Interest and Penalty imposition
3. Interpretation of the nature of activities for Service Tax liability

Analysis:

Issue 1: Demand of Service Tax under Business Auxiliary Service
The assessee, engaged in Advertising Services, received a Show Cause Notice demanding payment of differential Service Tax under Business Auxiliary Service for a specific period. The adjudicating authority confirmed the demand, but the Ld. Commissioner (Appeals) set it aside, relying on various Tribunal decisions. The Revenue appealed this decision. The Revenue argued that the assessee's activities fell under Business Auxiliary Service as per the CBEC Circular. In contrast, the assessee contended that they were only a print media and not a media entity, citing precedents. The Tribunal noted that the assessee received discounts, not commissions, from clients and paid Service Tax on the net amount. It concluded that there was no service-provider and service-receiver relationship between the assessee and the media, thus dismissing the Revenue's appeal.

Issue 2: Interest and Penalty imposition
Apart from the Service Tax demand, the Show Cause Notice also sought interest and penalty imposition. The Ld. Commissioner (Appeals) had set aside these penalties along with the tax demand, which the Revenue challenged. However, the Tribunal's dismissal of the tax demand also negated the need for interest and penalty imposition, thereby upholding the Ld. Commissioner (Appeals)'s decision in this regard.

Issue 3: Interpretation of the nature of activities for Service Tax liability
The crux of the matter revolved around the interpretation of the nature of the assessee's activities for determining Service Tax liability. The Revenue contended that the activities clearly fell under Business Auxiliary Service, while the assessee argued against this classification. The Tribunal analyzed the discounts received by the assessee and the absence of a service-provider and service-receiver relationship to conclude that the media was not the customer of the assessee, leading to the dismissal of the Revenue's appeal. The Tribunal's decision was supported by precedents and the specific nature of the discounts received by the assessee, reinforcing the finding that no Service Tax liability existed in this scenario.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the Ld. Commissioner (Appeals)'s decision in favor of the assessee based on the nature of the discounts received and the absence of a service-provider and service-receiver relationship, thereby clarifying the Service Tax liability in the context of the assessee's activities in the Advertising Services sector.