Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Dept. Can’t Classify Product as Zarda Scented Tobacco After Repeatedly Approving It As Chewing Tobacco: CESTAT *  Mere Uploading Of GST Order On Portal Is Not “Valid” Service: Tripura HC *  CGST Can Proceed Even If SGST Closed Similar Case Earlier: Delhi HC *  SC upholds 28% GST on online gaming with retrospective effect. *  West Bengal Govt cuts E-way Bill Threshold limit to Rs. 50,000 for intra-state goods movement. *  Criminal Prosecution Under Central Excise Act Can’t Continue After CESTAT Sets Aside Duty Demand on Merits: Punjab & Haryana High Court. *  Madras High Court Quashes GST Assessment Orders for Denial of Personal Hearing; Remands Matter Subject to 10% Deposit *  Ex Parte GST Order: Madras High Court Directs Immediate Removal of Bank/ITC Attachment Upon 25% Deposit *  J.K. Cement Receives GST Demand Order of Rs 8,02,113/- from Ahmedabad Tax Authority *  Delhi Police EOW Busts Alleged Rs. 128 Crore GST Fake Invoice Network. *  REPLY TO SCN CAN’T BE TREATED AS “EMPTY FORMALITY”: ORISSA HIGH COURT QUASHES GST DEMAND OF RS. 57.30 LAKH *  Challenge to CGST Provisions restricting ITC to Bonafide Purchasers : Allahabad HC issues notice *  CBIC Notifies Revised Customs Tariff Values for Edible Oils, Gold, Silver, Brass Scrap and Areca Nuts *  Delhi HC Orders Removal of GST Attachment After Statutory 1 Year Period Expired *  GSTAT Extends Relaxed Appeal Filing Guidelines till December 31, 2026 *  AO fails to Provide Import - Export Data from DGFT to Taxpayer for Reconciliation *  Gold, Silver Imports To Get Costlier As Govt Raises Customs Duty To 10%  *  GSTAT Enables Pre-Payment Access to Document Upload and Checklist for GST Appeal Filing *  GST Portal Restrictions Can’t Override Statute: Gujarat HC Allows Cross-State Transfer Of CGST ITC After Amalgamation *  Centre Revises HS Codes for Large Diameter Steel Pipes Used in Oil & Gas Pipelines *  Customs Duty Liability Arises On Warehouse Clearance Date: Supreme Court *  Government lifts export ban on de-oiled rice bran *  CESTAT Grants 12% Interest on Pre-Deposit for Investigation from Date of Deposit till Refund and Denies Interest on Interest. *  Government Overhauls GST Classification Framework for Non-Alcoholic Beverages; Fruit Juice Drinks, Milk-Based Beverages and Caffeinated Drinks to Attract Revised 5% and 40% GST Rates from May 1, 2026 *  India’s gross GST collections hit a record Rs 2.42 lakh crore in April, up 8.7% *  Customs clearance stalled, revenue hit over MRP dispute *  Shipping Corporation explores Middle East routes as Hormuz tensions disrupt cargo movement *  India, Kenya signs MoU for exchange of pre-arrival customs information *  No demand of Taxes under Reverse Charge if Tax Already Discharged by Service Provider under forward charge *  The India-New Zealand Free Trade Agreement, signed "once-in-a-generation" deal that eliminates tariffs on 100% of Indian exports to New Zealand
Subject News *  Consignment Sales Can’t Be Reclassified as Inter-State Sales Based on Pre-Agreement Evidence: CESTAT *  Exporter Can’t Be Denied Advance Authorization Benefit Due To ICEGATE Technical Glitch: Delhi High Court *  No GST Demand For Mere Wrong Set-Off Of IGST Credit Under CGST And SGST Heads: Kerala HC. *  Cenvat Credit Can’t Be Denied on Input Services Having Nexus With Manufacturing Activities: CESTAT *  Pending Proceedings Can’t Survive Without Saving Clause: Calcutta High Court Quashes GST Demand of Rs. 6.28 Crore After Omission of Rule 96(10) *  Madras HC Quashes GST Demands on TASMAC (Tamil Nadu State Marketing Corporation) Bar Licence Fee *  GST Proceedings Cannot Survive Omitted Rule Without Saving Clause: Calcutta HC *  Provisional Release Can’t Be Denied Solely On Dept. Suspicion Of Misclassification And Undervaluation Of Imported Goods: CESTAT *  Businesses Should Not Be Kept Outside GST Regime Without Due Process: Gauhati High Court *  Punjab & Haryana HC Directs Reconsideration of Contractors’ Claim for Additional GST Payment After Tax Rate Hike From 12% to 18% *  S. 108 Statements Can’t Be Sole Basis Without Following Section 138B Procedure: CESTAT *  Bombay High Court Frames Key Questions on Mandatory Distribution of ITC U/s 20 CGST Act *  Filing of Annexure-B for Refund Applications involving Accumulated ITC using the offline utility in GST portal: GSTN *  No Service Tax on Parent Company’s Un-Invoiced Cost Allocations Without Actual Service or Consideration: CESTAT  *  Calcutta High Court Upholds GST Classification of Polypropylene Leno Bags as Plastic Products *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  GSTAT Issues Major Bench Allocation Framework; All Appeals to First Go Before Division Bench *  ITC Blocking Without Reasoned Order Violates Rule 86A; Punjab & Haryana HC Directs Release of Credit *  Allahabad HC Refuses Bail to CGST Superintendent In Rs. 70 Lakh Bribery Case *  S.130 Can’t Be Invoked Without Prior Tax Determination U/s 73/74: Allahabad High Court Quashes GST Confiscation Proceedings *  SC grants Bail to Rs 54cr GST case  *  Karnataka HC Sets Aside Duplicate GST Orders, Orders Fresh Hearing on GSTIN Cancellation *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  Transfer Of Unutilized ITC After Amalgamation - Supreme Court Issues Notice *  PUNJAB & HARYANA HC QUASHES GST CANCELLATION NOTICE FOR FAILURE TO PROVIDE CBIC ENQUIRY REPORT *  LICENSE FEE, TECHNICAL ASSISTANCE CHARGES NOT INCLUDIBLE IN CUSTOMS VALUE UNLESS THEY ARE A CONDITION OF SALE: CESTAT *  DELHI HC ORDERS REMOVAL OF GST ATTACHMENT AFTER STATUTORY 1 YEAR PERIOD EXPIRED *  CUSTOMS BROKER CAN’T BE FAULTED JUST BECAUSE EXPORTER’S GST REGISTRATION WAS PREVIOUSLY CANCELLED: CESTAT   *  Supreme Court Dismisses Review Plea Against Delhi HC Ruling Holding Real Operator Behind Fake GST Firms Liable As ‘Taxable Person  *  GST Appeal Can’t Be Rejected Merely Because DRC-07 Was Not Uploaded On Portal: Bombay High Court  

Comments

Print   |    |  Comment

PJ/Case Law/2013-14/1839

Whether discounts given to an advertising agency would be leviable to service tax under business auxiliary services?

Case:-P. GAUTAM & CO. VERSUS COMMISSIONER OF SERVICE TAX, AHMEDABAD
 

Citation:- 2011(24) S.T.R. 447 (Tri.-Ahmd.)
 
Brief Facts:-These two stay petitions are filed for the waiver of pre-deposit of the following amounts.
Service tax demand of Rs. 98,037/- penalties of Rs. 200/- per day under Section 76 and Rs. 5000/- under Section 77. Since the issue involved in both these stay petitions is identical and is of the same assessee, these two stay petitions are disposed of by a common order.
The above said amounts have been confirmed by the adjudicating authority and upheld by the first appellate authority as service tax liability on the discounts/incentives that are received by the appellant as an advertising agency from the media would be liable for the service tax under the category of business auxiliary services.
 
Appellant Contentions:-Learned counsel would draw our attention to the fact that the issue is decided in the following cases :
 
(1)  Kerala Publicity Bureau [2007 (10) STT 457 (CESTAT-Bang.) = 2008 (9)S.T.R. 101 (Tri.-Bangalore)]
(2)  Euro RSCG Advertising Ltd. - [2008 (16) STT 232 (CESTAT-Bang.)] = 2007 (7)S.T.R. 277 (Tri.)
(3)  Marketing Consultants & Agencies Ltd. - [2007 (6) STT 318 (CESTAT-Bang.) = 2006 (4)S.T.R. 136 (Tri.)]
All passed by the same Bench, in an identical issue wherein the Bench had held in favour of the assessees.
 
Respondent Contentions:-  Learned departmental representative reiterates the findings of the lower authorities and submits that they are liable to pay the service tax as confirmed.
 
Reasoning of judgment:-After hearing both sides for some time on the stay petitions, we find that the appeals themselves could be disposed of as a Coordinate Bench of the Tribunal has taken the view in an identical issue. In view of this, the stay petitions filed for the waiver of the pre-deposit of the amounts involved are allowed and appeals themselves are taken up for disposal.
On perusal of the impugned orders, we find that in para 8, learned Commissioner (Appeals) has recorded the following findings.
 
“8.The whole issue revolves around the question as to whether service tax is leviable on the discounts/incentives that the appellants (an advertising agency) receive from the print media for the advertisements that the former get published on behalf of clients. The argument advanced by the appellants is that no service tax can be leviable thereon as this is not a service provided to their clients. From the emphasis placed on this argument it appears that the appellants have overlooked a fundamental issue, that is, the ability to provide different kinds of services to different clients. It is nowhere laid down that merely because an assessee provides one set of services to one set of clients; it is precluded from providing any other services to any other clients. Though the appellants are into business of providing advertising service they can also provide different services, for which classification would depend on the nature of services being provided. In the instant case as mentioned in the impugned order and also as stated by the appellants’ they get discounts for volume of business or advance payments. The business they provide to the print media, for which they get the incentive/discount, is the service they provide to their client i.e. the business they provide to the print media, for which they get the incentive/discount, is the service they provide to their client i.e. the print media. This service has been held to be a taxable service under the category of “Business Auxiliary Service” in the impugned order. It is therefore apparent that for different services rendered, any assessee could have different seats of clients.”
It can be seen from the above reproduced findings that the issue regarding whether discounts/incentives given to the appellant as an advertising agency would be liable for the service tax under the business auxiliary services. It is seen and as correctly pointed out by the learned counsel that the Coordinate Bench of the Tribunal in the three cases as cited herein above, have held that the discounts/incentives received by the assessee from the print media will not be liable for service tax under the category of advertising agency services. If that be so, the said discounts/incentives itself cannot be considered for the purpose of taxability under the head business auxiliary services as the amounts which are received are in respect of the services provided under the category of advertising agency services and the amount are discounts and incentives and not as charges for services.
 
In view of the foregoing, respectfully following the view taken by the Coordinate Benches in an identical issue, we are of the considered view that the impugned orders are liable to be set aside and we do so. The impugned orders are set aside and appeals are allowed. Stay petitions are also disposed of.
 
Decision:-Appeal allowed.

Comment:- The essence of this case is that discounts/incentives received by the assessee from the print media will not be liable for service tax under the category of “Business Auxiliary Services” in view of precedent decisions of the Tribunal on even issue wherein it was held that such discounts are amounts received with respect to advertising agency services.

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