Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Missing seized records must be considered while testing ITC claim; duplicate GST demands ordered corrected: Delhi High Court. *  GST appeal can’t be rejected without addressing taxpayer’s grounds: Allahabad High Court. *  Surplus IGST credit can offset CGST, SGST shortfall: GSTAT. *  GST refund can’t be denied when cancelled airfares are returned with tax: GSTAT. *  3 Hearing notices issued within 2 minutes: Gujarat High Court flags portal flaw, seeks report. *  GSTR-9, GSTR-9C filing for FY 2025-26 enabled; pending GSTR-1 and GSTR-3B must be filed first. *  Dupattas are exempt fabrics, can’t be taxed as fibres at 4%: Madras High Court. *  Full transitional credit allowed on capital goods received after GST rollout: GSTAT denies Rs. 6.99 lakh export duty credit. *  GST return mismatch alone can’t justify fraud proceedings: GSTAT orders fresh adjudication under section 73. *  Supplier found non-existent later can’t alone justify input tax credit denial: GSTAT. *  GST interest stops once tax reaches government account, can’t run until return filing: GSTAT. *  Cancelled flat booking- GST refund can’t be denied without excluding COVID period from limitation: GSTAT. *  India notifies rules of origin for India–New Zealand FTA. *  Incomplete E-bike kits classifiable as complete vehicles, but not eligible for CKD duty concession: CESTAT. *  Same GST rate on main input and output can’t by itself bar inverted duty refund: GSTAT. *  Unjust enrichment doesn’t apply to customs refunds from assessments finalised before July 13, 2006: Gujarat High Court. *  CENVAT credit can’t be denied solely because plant And machinery are embedded in earth: Karnataka High Court. *  DFIA exports ineligible for RoDTEP benefits; customs directs repayment with applicable interest. *  Second E-Way bill alone doesn’t prove another supply: GSTAT. *  Bail denied in Rs. 1.19 crore fake GST refund case over risk of accused absconding again: Punjab and Haryana High Court. *  GST registration can be restored after revocation deadline if outstanding dues are paid: Gauhati High Court. *  Multiple GST proceedings over same suppliers: Calcutta High Court directs dept. to share findings for adjudication. *  E-Governance portal services not OIDAR, fixed deposit interest not taxable: CESTAT. *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court.
Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

Comments

Print   |    |  Comment

PJ/CASE LAW/2015-16/2596

Whether credit deniable on the ground that advertising agency engaged broadcasting agency to broadcast advertisement?

Case:-INDIAN OIL CORPORATION LTD. Vs COMMISSIONER OF C. EX., MUMBAI-II

Citation:-2014 (36) S.T.R. 833 (Tri. - Mumbai)

Brief Facts:- 
The appeal is directed against Order-in-Original No. 03/Commr/M-II/2012, dated 15-6-2012 passed by the Commissioner of Central Excise, Mumbai-II.
The appellant, M/s. Indian Oil Corporation Ltd., is a Public Sector Undertaking engaged in the manufacture of petroleum products. The applicant engaged the services of four advertising agencies for preparing the advertisements for their products. The advertising agencies further engaged the services of Times Global Broadcasting Co. Ltd. for broadcasting the advertisements. The broadcasting company paid Service Tax in respect of taxable service provided by them and recovered the amounts from the advertising agencies. The advertising agency also raised invoices in favour of the applicant. The appellant availed credit in respect of the Service Tax paid on the taxable service of broadcasting done by Times Global Broadcasting Co. Ltd. The Revenue issued show cause notice for denial of such credit. The adjudicating authority denied the credit on the ground that the broadcasting company has not provided service directly to the appellant since the broadcasting company was engaged by the advertising agency. The adjudicating authority confirmed the demand and imposed penalty.

Appellant Contentions:- The contention of the appellant is that it is the product of the appellant which is being advertised by the broadcasting company and the broadcasting company issued invoices specifically mentioning advertiser as the applicant. Therefore the services have been rendered to the appellant. The appellant also relied upon Board’s Circular, dated 1-11-1996 where it has been clarified that the advertising agency is liable to pay Service Tax in respect of the preparation of advertisement material and the amount paid in respect of advertisement in the newspapers or in the electronic media will not be includible in the value of taxable services for the purpose of levy of Service Tax. The contention is that as the invoices issued by the broadcasting company specifically mentioned the advertiser as the appellant; therefore the credit cannot be denied. The learned Counsel for the appellant further submits that subsequent to the present demand, three more show cause notices were issued vide notices dated 6-7-2012, 9-4-2013 and 18-1-2013 proposing to deny Service Tax credit on the Broadcasting Services availed by the appellant for the period April, 11 to December, 2012. These three show cause notices were adjudicated by the same Commissioner who vide order No. 12-14/RN/COMMR/M-II/2013-14, dated 30-9-2013 dropped the proceedings by holding that Broadcasting Services availed by the appellant is an input service and appellant has borne the tax incidence of such services availed; the service of advertising agency and broadcasting service are separate; the invoices have been raised on the appellant charging Service Tax; the appellant had borne the incidence of Service Tax and therefore, they are rightly entitled for benefit of credit of Service Tax paid. This order, according to the Counsel, has been accepted by the Department as they have not challenged the same. In view of the above, the impugned order holding a contrary view is clearly not sustainable in law.

Respondent Contentions:-The Revenue relied upon the findings of the adjudicating authority and submitted that the broadcasters were engaged by the advertising agencies; therefore it cannot be said that the applicant engaged the broadcasters for advertisement in the electronic media. The credit of Service Tax paid by the broadcasting agency is available to the advertising agency engaged by the applicant and not to the applicant. The learned Commissioner (AR) further submits that reliance placed on Board’s Circular, dated 1-11-1996 is not relevant because broadcasting service was not taxable when the said circular was issued and, therefore, the clarification given by the Board in the said circular would not apply. It is his further contention that the appellant has not received the broadcasting service directly but through the advertising agency. Therefore, the broadcasting service should be treated as an input service to advertising agency and, therefore, the appellant is not eligible for the Cenvat credit of Service Tax paid on broadcasting service.

Reasoning of Judgment:- The Tribunal have gone through the copies of sample invoices produced by the applicant, issued by Times Global Broadcasting Co. Ltd. In the invoices it is specifically mentioned that the advertiser is Indian Oil Corporation Ltd. (applicant). Further, we find that the advertising agencies while discharging the service tax liability have not taken into consideration the expenses in respect of the advertisement in the electronic media as clarified by the Board in the circular, dated 1-11-1996. For ready reference, the relevant portion of the Board’s Circular is reproduced below :-
“It is further to be clarified that in relation to advertising agency, the Service Tax is to be computed on the gross amount charged by the advertising agency from the client for services in relation to advertisements. This would, no doubt, include the gross amount charged by the agency from the client for making or preparing the advertisement material, irrespective of the fact that the advertising agency directly undertakes the making or preparation of advertisement or gets it done through another person. However, the amount paid, excluding their own commission, by the advertising agency for space and time in getting the advertisement published in the print media (i.e. Newspapers, periodicals etc.) or the electronic media (Doordarshan, private TV Channels, AIR etc.) will not be includible in the value of taxable service for the purpose of levy of Service Tax. The commission received by the advertising agency would, however, be includible in the value of taxable service.”
We observe that there is no dispute in the present case that the broadcasting of advertisement has been done on behalf of the appellant and the bills have also been raised on the appellant and the appellant has borne the incidence of Service Tax on the broadcasting service. Further, while passing the order, dated 30-9-2013, the adjudicating authority has caused verification of the transactions undertaken by the appellant in respect of broadcasting services and advertising agency services. After verifying that the appellant had availed both the services and has also borne the incidence of Service Tax, he came to the conclusion that the appellant is rightly eligible for the benefit of the Cenvat credit of the Service Tax paid on broadcasting service. The same ratio shall apply for the previous period also. Therefore, we do not find any merit in the impugned order. Accordingly, we set aside the same and allow the appeal with consequential relief, if any, in accordance with law.

Decision:-Appeal Allowed.

Comment:- The crux of the case is that if the assessee engages an advertising agency for advertisement service & the advertising company further engages an broadcasting company to broadcast the advertisements, then definitely advertisement is done on behalf of appellant & bills will also be raised on assessee mentioning that advertiser was assessee and so incidence of service tax is indirectly borne by assessee. Moreover, as there is no doubt as regards availment of advertising service by the appellant and payment of service tax by them, the benefit of credit cannot be denied. 

Prepared By: Meet Jain

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com