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2023 (9) TMI 20 - AT - Service TaxLevy of Service Tax - volume discounts/incentives received from the Media owners at the end of the financial year - HELD THAT - Service Tax has been discharged on the basis of invoice raised by the media house by the clients/ advertisers on the entire consideration amount and against service commission received by the Respondent from the advertisers, service tax was also discharged but because of large volume of advertisement was facilitated by the Respondent, as a token of gesture/gratitude, media house passed on certain discount/incentives to the Respondent against which Service Tax was already discharged by themselves. Therefore, the said incentive can t be equated with consideration to the activities carried out by the Respondent for the reason that Respondent had not promoted or canvased in placing of advertisement by its client on any specific media house and the choice of media house nested with the clients, for which it can t be considered as any kind of activity against which incentive/discount was received by the Appellant as a consideration, apart from the fact that against placing the order of its client in the print or broadcasting both media house as well as Respondent had discharge their Service Tax liabilities. The only ground on which the Review order is based is on the decision of the CESTAT passed in the case of BBC World (India) Pvt. Ltd. Vs. Commissioner of Service Tax way back in 2009 that is far before introduction of comprehensive taxation scheme in 2012 and that will have so application to the present issue for the reason that for the period pre 2012, the issue had been settled by this Tribunal in several decisions including in Respondent s own case for two different periods and for the period post 2012, even though advanced ruling of the AAR is not a binding precedent and binds only intra parties. Appeal dismissed.
Issues involved:
The legality of the order absolving liability of the Respondent company from payment of Service Tax on volume discounts/incentives received from Media owners. Summary: The Revenue Department challenged the order passed by the Commissioner of Service Tax-VI Mumbai, which had absolved the liability of the Respondent company from paying Service Tax on volume discounts/incentives received from Media owners. The Respondent, engaged in placing advertisements on behalf of clients, received volume discounts from media houses at the end of the year. The Revenue Department claimed these discounts to be Business Auxiliary Service, while the Respondent argued they were gratuitous. The dispute centered around the nature of these discounts and whether they were taxable. The Appellate Tribunal reviewed the arguments presented by both sides. The Appellant-Department contended that the Commissioner's order failed to distinguish between the pre-2012 and post-2012 periods when Service Tax laws underwent significant changes. They argued that the Respondent's services were that of an intermediary, not an advertising agency, and cited a previous Tribunal decision to support their position. The Appellant sought to set aside the Commissioner's order based on these grounds. In response, the Respondent's Counsel highlighted previous Tribunal decisions and an advance ruling that supported the non-taxability of volume discounts/incentives received post-July 2012. They argued that these discounts were voluntary and not subject to Service Tax, referencing various judgments to support their stance. The Respondent contended that there was no contractual obligation for media houses to provide these discounts. After reviewing the case record and arguments presented, the Tribunal found that the volume discounts/incentives received by the Respondent were gestures of gratitude from media houses and not consideration for specific activities. The Tribunal noted that Service Tax had already been discharged by both the media houses and the Respondent for the services rendered. The Tribunal emphasized that the previous Tribunal decision cited by the Appellant was not applicable to the current scenario due to changes in taxation laws. Considering the binding precedent set by the High Court of Madras and the non-taxable nature of such incentives, the Tribunal dismissed the appeal and upheld the Commissioner's order. The Order: The appeal was dismissed, and the order passed by the Commissioner of Service Tax-VI, Mumbai was confirmed.
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