2023 (1) TMI 297 - AT - Service Tax

Levy of Service Tax - Advertising Agency Service or not - remitting 85% of the total amount received from their customers on getting space/time from media agencies or news papers or various publications - It has been argued that it is only the sub agent M/s. Surya Publicity which provided the services to their client and since appellant has not provided service, there is no question on payment of any Service Tax - exemption under Notification No. 06/2005-ST dated 01.03.2005 with effect from 01.04.2005 - HELD THAT - In the instant case M/s. Surya Publicity was providing Advertising Services to its client. M/s. Surya Publicity was not discharged any service tax liability as the same was liable for the levy of Service Tax. M/s. Surya Publicity was purchasing time and space in the newspaper / media companies through the appellant. The amount paid by M/s. Surya Publicity to the appellant for purchase of time M/s. Surya Publicity to the appellant for purchase of time and space was sought to be tax by revenue under the category of Advertising Service. 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 this regard the decision of Tribunal in case of CCE, CHANDIGARH VERSUS M/S. HK. ASSOCIATES AND OTHERS, H. KASS.. VERSUS CCE 2008 (12) TMI 65 - CESTAT, NEW DELHI is relevant - It was held in the case that amounts paid to M/s. H.K. Associates by KBPL have been accounted as advertisement and sales promotion expenses. A portion of the sum so received was spent on advertisement by H.K. Associates. These facts alone can not lead to an inference that M/s. H.K. Associates have rendered the services as advertising agency. The appeal is allowed.

Summary

Issues:
Appeal against demand of Service Tax on services provided as advertising agency.

Analysis:
1. The appellant, engaged in advertising services, remitted 85% of total amount received from customers to media agencies, retaining 15% as commission. A Show Cause Notice sought to classify their service under "Advertising Agency Service" taxable under Section 65(105)(e) of the Finance Act 1994.

2. The notice alleged non-payment of Service Tax for services to a sub-agent claiming exemption. The appellant argued they did not provide services to clients directly, relying on a circular stating commission-based advertising services are not taxable under "Advertising Agency Service."

3. The appellant cited tribunal decisions supporting their argument against the demand raised under "Advertising Agency Services."

4. The tribunal found the appellant acted as an intermediary for the sub-agent, who provided advertising services to clients. No evidence proved the appellant provided "Advertising Agency Services," as per a tribunal decision involving a similar scenario.

5. The tribunal upheld the appeal based on CBEC clarification and previous tribunal decisions, setting aside the demand for Service Tax on the appellant's services.

Conclusion:
The tribunal allowed the appeal against the demand for Service Tax on the appellant's advertising services, highlighting the intermediary role played and the lack of evidence supporting the classification under "Advertising Agency Services." The decision was based on relevant legal interpretations and precedents, ultimately setting aside the demand.