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TMI Blog2006 (12) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... the second one is non-fee based client. In the case of fee based clients, the appellants charged the clients a fixed fee per month irrespective of whether any advertisement is broadcast or not. In respect of these clients, the appellants provide advertising service by engaging print media, TV channels and charge the clients without any mark up and pass on the discount given to them by the Broadcasting agency. Suppose the Tariff rate charged by the broadcasting agency is Rs. 100/-, they give 15% discount to the appellants. As a result, they charge only Rs. 85/- along with 10.5% service tax which they have to pay to the Exchequer. The appellants passed on the discount given to them by the broadcasting agency by charging Rs. 85/- plus 10.5% service tax from their clients. Revenue has issued a Show Cause Notice for payment of service tax on the 15% discount given to the appellants by the broadcasting agency. The Jurisdictional Commissioner confirmed a demand of Rs. 55,05,725/- in terms of Section 75(1) of Finance Act 1994. The details of the amount are given in Annexure II of Show Cause Notice. Interest under Section 75 has been demanded. Penalty under Section 76 at the rate of 200/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot related to the service rendered to their client nor is it passed on to their clients. Lower authority confirmed the proposals in the Show Cause Notice. He demanded service tax of Rs. Interest under Section 75 of the Finance Act has been demanded. Penalty of Rs. 100/- per day were demanded under Section 76 of the Finance Act, 1994. A penalty equal to the service tax amount confirmed was imposed under Section 78 of the Finance Act, 1994. The Commissioner (Appeals) in the impugned order upheld the order of the lower authority. Hence the appellants have come before the Tribunal for relief. 6. Shri Raghuraman, learned Advocate appeared for the appellants and Shri R.K. Singla, learned Jt. CDR appeared for the Revenue. 7. The learned Advocate urged the following :- (i) The cash discount and incentives for target achieved have nothing to do with the rendering of services by the appellants to their clients and therefore they are not liable to be included as value of the tax able services. (ii) The cash discount is received when the appellants make prompt payment of bills to the media. It is not for the services rendered to their clients and hence this amount is not liable for service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collecting commissions on Individual Invoices and therefore no service tax is paid on Individual bills Intel Print TV Others Bill @ net Bill @ Gross Commn @ 15% ST Payable Up to May 03 0 0 0 0 0 0 0 From Jun 03 to Sep 04 160929754 108149442 2366691 271445887 310213102 47902215 3832177 From Oct 04 to Dec 04 23303363 44376048 1355000 69034411 81216954 12182543 1242619 Dell Up to May 03 1306447 0 0 1306447 1536996 230549 11527 From Jun 03 to Sep 04 20793437 0 0 20793437 24462867 3669430 293554 From Oct 04 to Dec 04 6491450 0 0 6491450 7637000 1145550 116846 Crane Upto May03 0 0 0 0 0 0 0 From Jun 03 to Sep 04 238743 0 0 238743 280874 42131 3370 From Oct 04 to Dec 04 312800 0 0 312800 368000 55200 5630 65227619 5505725" The appellants pleaded before the original authority that they had not billed nor collected the amount of Rs. 6,52,27,619/- from the clients and this cannot be taken as the value of the taxable services provided by the agency. They had also stated that the broadcasters gave agency commission through trade discount on percentage basis at 15%. The Commissioner has given the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtising agency in relation to advertisement in any manner." In the present case, a person or an organization who wants to advertise their product approaches an advertising agency. Therefore such a person/organization who wants to avail the services of advertising agency becomes the client of the advertising agency. The advertisement can be done in various ways either through Print Media or through Radio or Television, etc. in order to fulfill the requirements of his client the advertising agency which is the service provider gets in touch with the appropriate media. In other words as far as the advertising agency is concerned, its client is not the media. In order to provide advertising services the advertising agency charges certain amounts from the clients. Such amounts are liable to service tax. With regard to the relationship between the advertising agency and the media, the advertising agency has to pay amount to the media and not the other way. To put it differently, the media such as broad casting agency charges the advertising agency for insertion of the advertisement either in Print Media or in Television. In the present case, the media gives a discount of 15% to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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