Whether Services provided by assessee falling under BAS

PJ/Case Laws/2011-12/1498

Case: Grey Worldwide Logistics (I) Pvt. Ltd VS Commissioner of Service Tax, Mumbai

Citation: 2011 (24) S.T.R. 555 (Tri- Mumbai)

Issue:- Whether applicant liable to pay Service Tax on writeback & discount received by them from media on Advertisement under Business Auxiliary Service?

Brief Fact:- Applicants are providing the service of advertisement to their clients on payment of certain amounts on account of service rendered to them. As per the agreement the applicants are claiming certain amount paid by them to media and claim deduction of reimbursement from the gross amount of service rendered to their client i.e. media costs + commission + service tax. During the course of investigation, it was revealed that the applicants are not paying service tax on the amount which they have written-backs due rate differences in media cost and they are receiving discount from the media on their volume of work. A demand was also proposed for the service tax on co-ordination cost paid to overseas entities during the period 1-10-2001 to 31-12- 2006. The show-cause notices were adjudicated demands were confirmed in both the show-cause notices for write-backs, discount received from media, the demand of Rs. 75,68,236/-. A demand was also confirmed on account of non-payment of service tax on co-ordination costs paid to overseas entities for the period 1-7-2003 to 31-12-2006 along with interest and various penalties under the Finance Act, 1994. By these appeals, the Applicants are seeking waiver of pre-deposit at this stage.

Appellant’s Contention:- The learned Chartered Accountant appearing for the applicants submits that the applicants are not liable to pay service tax on write-backs and volume discount as these are not the amount of service rendered by them as the service rendered by the applicants are covered under the commission received by them as per the agreement i.e. 15% of the total gross value of the service rendered by them. He further submitted that prior to 18-4-2006, the applicants are not liable to pay service tax on co-ordination costs paid to the over-seas entities. He further submitted that as media is not their client, therefore the discount or write-backs received from media are not to be includible in their tax-able services. He also relied on the decision of Euro RSCG Advertising Ltd. v. Com-missioner of C.S.T., Bangalore reported in 2007 (7) S.T.R. 277 (Tri.-Bang.).

Respondent’s Contention:- The learned JCDR strongly opposed the stay application and submitted that the service tax demand has been made under the category of 'Business Auxiliary Service" against for promoting the business of media against rendering of those services the media has given them entities discount and write-backs. Therefore the applicants are liable to pay service tax on these services as they are providing services to the media also.

Reasoning of Judgment:- The allegation against the Applicants is based on the agreement entered by the applicants with Sony Entertainment Television. As per that agreement, the applicants are providing the services of media bookings and issue release instruction on your behalf. Supervise the production of media such as programmes for sponsored telecasts. Negotiate rates, positions, payment terms and other such matters involving the placement of advertisements with the media. Implement media strategy against objectives. Therefore, as per the agreement prima facie the applicants are providing services to media under the category of 'Business Auxiliary Service". Therefore, we are of the prima facie view that the applicants have rendered the services to media. Therefore, the applicants are liable to pay service tax on write-backs and discount received by them from media on advertisements. Further, we are of the prima facie view that the service tax on co-ordination cost paid to overseas entities for the period prior 18-4-2006 are not payable by the Applicants. From the above discussion, the applicants have not made out a case of 100% waiver of pre-deposit. Accordingly, we direct the Applicants to make a pre-deposit of Rs. 85,00,000/- (Rupees eighty five lakhs only) within eight weeks and report compliance on 11-11-2011. On such compliance the balance amount of service tax, interest and various penalties under the Finance Act, 1994 shall remain stayed during the pendency of the appeal.

Decision:- Application disposed off

Comments

PJ/Case Laws/2011-12/1498

Post a Comment

Query