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TMI Blog2012 (7) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... e, Advs. For Respondent: Shri P K Agarwal, Jt. CDR Per: Ashok Jindal: Service Tax demand of Rs.90,25,074/- along with interest and various penalties under the Finance Act, 1994 has been confirmed against the applicants. The applicants are seeking waiver of pre-deposit of the above said demands by way of this stay petition. 2. The brief facts are that the applicants are engaged in the service of advertising agency and registered with the service tax department under the category of advertising agency with effect from 5.7.2002. On an information received by Anti Evasion section of service tax department, the premises of the applicants were visited wherein it was observed that an advertising agency undertakes the work of creating an advertisement material for a fee and further undertakes the work of placing advertisement in the media for display. The applicant undertakes only the latter part i.e placing of creating ad in media for display. The activity of placing an ad with media involves obtaining an order from the client for whom the advertisement is being displayed and by placing an order on a print or broadcasting media. The service pertaining to display in print medi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice of advertisement under the category of advertising agency and have not provided any service to the print media or broadcasting agency. The advertisement service which is provided to the clients, the service tax has been duly paid. As the applicant have not provided any service to print media or broadcasting media, therefore, any discount received from the broadcast media, the applicant is not liable to pay service tax as they have not rendered any service to them. He further submitted that show-cause notice has been issued by invoking extended period of limitation as the period involved is July 2003 to October 31, 2006 and show-cause notice is issued on 23.03.2007, the substantial demand is for the extended period of limitation, same is barred by limitation as in the facts and circumstances of the case, the extended period is not invocable. He further submitted that as the applicants are giving bulk quantity of advertisement to print/broadcast media and on the sale of their space, the incentive has been given to the applicants on the volume. In that case the activity does not amount to business auxiliary service as the applicants are not promoting the business to print/broadc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re receiving volume discount from media. The allegation is that this activity of the applicant is an activity of promoting the business of media and the same is termed as business auxiliary service . 6. We have gone through the facts of this case. In fact in this case the applicants are providing service to their clients for advertising their ads through media. There is no agreement on record between the media and the applicant for promoting the business of media. In fact, media has given additional discount on the volume of ads given by the applicant to his clients. The case law relied upon by the ld. DR in the case of Grey World Wide is not applicable to the facts of this case as in that case there is a written agreement between the appellant and Sony Entertainment Television. In the case of Euro RSCG Advertising Ltd. this Tribunal has clearly held that any amount received by service provider from his client only is liable to service tax and not amounts received from others. As far as advertising agency is concerned, its client is not the media. Incentive received by the assessee from certain publication after they achieved certain target, incentive given to them is not connec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Since activity of getting volume discount is taken business auxiliary service in the cited case, there is no reason to take a different view in the present case. 5. As regards Euro RSCG Advertising Ltd. (supra), in this case tribunal held that amount received by service provider from his clients is only liable to service tax and not amount received from others. The issue in the cited case was related to advertising service and not to business auxiliary service. Moreover, in case of M/s Grey Worldwide (supra), we have not relied on this decision in case of Euro RSCG Advertising Ltd. though applicant was placing strong reliance on this case. In case of business auxiliary service, service provider is the appellant and client is media. 6. The applicant also placed reliance in the case of Tata Motors Insurance Service Ltd. (supra). In this case applicant was receiving commission from various insurance companies for promoting their business by way of insuring new vehicle through their company and applicant was paying service tax on this commission. This supports Revenue contention in the present case. Applicant was also receiving commission from Principal supplier based on quantum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the year which was shown as income in the books of accounts of the advertising agency. The revenue was of the view that the volume discount received by the advertising agency is for the services rendered by the agency to the media, for promotion of the business of the latter, which falls under the category of business auxiliary service and the advertising agency is liable to pay service tax on this amount received. In facts of the case before me, there is no written agreement between the media and the advertising agency in this regard. The revenue did not conduct any enquiry with the media about the nature of the payment (volume discount) made by them to the advertising agency. They made enquries with the advertising agency who stated that the discount received by them is not client specific and is in the nature of prompt payment discount and volume discount. The question is whether the discounts received by the advertising agency is liable to service tax under business auxiliary service. The hon'ble Member (Judicial) has taken the prima facie view that the transaction is not liable to service tax while the hon'ble Member(Technical) has taken the opposite view. Hence the refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In other words, the appellant advertising agency, does not have a free hand to decide the choice of media or duration of advertisement. If that be so, the appellant cannot function as a business auxiliary service agent of the media who can promote the business of the media. Secondly, the incentive is received by way of discount, whether prompt payment discount or volume discount. A discount is the reduction in the price given to the buyer/receiver of the goods/services. Can a buyer/receiver of services be considered as an agent of the seller/provider of service? The answer is a clear NO . Merely because the transaction is routed through the advertising agency, should the treatment be different. In my view, the definition of business auxiliary service given in the Finance Act, 1994 does not warrant such a view. It is for this reason that this Tribunal, in a number of cases relied upon by the appellant, including the Gautam Co. case cited supra, came to the conclusion that service tax is not leviable on the discounts/incentives received by the advertising agency from the media. 6. In view of the foregoing, I am of the considered opinion that the appellant has made out a stro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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