9911796707
TMI Blog2011 (11) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... he taxable service provided and shall be included in the value for the purpose of charging service tax on the said service. In instant case from the agreement between agency & its clients it does not come out clearly that the agency is working as a pure agent of the client. Therefore, service tax would be levied on the gross amount charged from clients. Further, appellant under the CENVAT Credit Rules is entitled to avail such credit of the service tax paid on input service used in or in relation to the provision of the output service. Therefore, the matter has to be remanded back to the original authority for quantification of the service tax demand after taking into account the input/input service tax credit that the appellant will be el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner who vide order dated 23/11/2009 confirmed the demand of service tax and also disallowed CENVAT credit. He also demanded interest on the said amounts under section 75 of the Finance Act, 1994 and imposed penalty of Rs. 36,92,136/- under Section 78 of the said Act. 2.2 The appellant preferred an appeal before the Commissioner (Appeals) who vide the impugned order rejected their appeal and hence the appellants are before us. 3. The learned counsel for the appellant makes the following submissions: 3.1 It is an accepted practice in advertising agency business to pay the bills of advertisers such as TV channels, cinema houses, hoarding suppliers for those released in respective media and subsequently recover the same from the custome ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt on which they have discharged the service tax liability. 3.3 He further placed reliance on Rule 5 of the Service Tax (Determination of Value) Rules, 2006. As per the said rule where any expenditure or costs are incurred by the service provider in the course of providing taxable services, all such expenditure or costs shall be treated as a consideration for the taxable services provided or to be provided and shall be included in the value for the purpose of charging service tax on the said service. Sub-rule (2) of the said rule states that subject to provisions of sub-rule (1), the expenditure or costs incurred by the service provider as a pure agent of the recipient of service, shall be excluded from the value of the taxable service if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy of service tax. 4. The learned AR appearing for the Revenue, on the other hand, reiterates the findings given in the lower appellate authority's order. 5. After hearing the arguments, we are of the view that the appeal itself can be taken up for disposal. Accordingly, after grant of stay against recovery of dues adjudged, we take up the appeal itself for consideration and disposal. 6. We have carefully considered the rival submissions. 6.1 From the agency agreement, a copy of which has been provided by the appellant, it is seen that the client has appointed the appellant to act as an advertisement agent/consultant on the terms set out in the agreement. As per the scope of the work indicated in the said agreement, the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Service Tax (Determination of Value) Rules, 2006 makes it abundantly clear that where any expenditure or costs are incurred by the service provider in the course of providing taxable service, all such expenditure or costs shall be treated as consideration for the taxable service provided and shall be included in the value for the purpose of charging service tax on the said service. Therefore, in the instant case also the appellants are liable to pay service tax on the gross amount charged from their clients in respect of the advertising agency services rendered. 6.3 However, the appellant shall be eligible to take credit of the excise duty/ service tax paid on inputs / input service used in or in relation to the provision of the output ..... X X X X Extracts X X X X X X X X Extracts X X X X
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