Service Tax — Valuation — Commission paid by broadcasting agency to the advertising agency not includible in assessable value - Service Tax - F. No. 341/43/2001-TRU,

Service Tax Valuation Commission paid by broadcasting agency to the advertising agency not includible in assessable value Service Tax Letter F. No. 341/43/2001-TRU Dated 18-10-2001 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi I am directed to say that doubts have been raised as to whether the "value of taxable service" in respect of broadcasting services will include the commission paid by the broadcasting agency to the advertising agency or not. The facts of the case are as follows. 2.In the invoices raised by the broadcasting agency on the advertising agency, the gross amount for the broadcasting services is indicated. From this amount, the commission or discount (usually 15% of the gross amount) given to the advertising agency is deducted and the net amount payable by the advertising agency to the broadcasting agency is indicated. Thus what is "received by the broadcasting agency" for the service rendered is the net amount excluding the commission or discount. In some cases, only the net amount is invoiced to the advertising agency. 3. The matter has been examined by the Board. The value of taxable service is the amount received by the broadcaster for providing the broadcasting service. Therefore, service tax is leviable only on the amount received by the broadcaster for the services rendered. Since the amount received by the broadcaster is net of the commission or discount paid to the advertising agency, service tax will be payable on this amount. However, such abatement towards commission/discount shall be allowed only when the same is clearly indicated in the invoice/bill raised by the broadcasting agency on the advertising agency. It will be relevant to mention here that on the commission/discount received by the advertising agency, service tax is separately leviable under the category of advertising services. In this regard, your attention is invited to Board's circular F. No. 341/43/96-TRU, dated 31-10-96 wherein it was clarified that the commission received by the advertising agency for getting the advertisement published in the print media (i.e. newspaper, periodicals etc.) or the electronic media (Doordarshan, private channels, AIR etc.) will be includible in the value of taxable service under the category of the "advertising service". 4. Trade and field formations may be informed accordingly. 5. Receipt of this circular may please be acknowledged.