Order Date – 18 September 2023

Parties: M/s. The Advertising Corporation of India Private Limited Vs Commissioner of Service Tax, Kolkata

Facts –

• The Appellant, M/s. The Advertising Corporation of India Private Limited, is acting as advertising agency and engaged to procure advertisement for media only and earning commission @ 15% on the total bill raised on advertisement. The assessee is rendering service i.e. matter to be published in media towards advertisement.
• Two show cause notice was issued alleging that the appellant is assessee is availing 85% exemption on the value of taxable service from payment of service tax without any authority of law and also not incorporated the entire value of taxable service in their ST-3 return as detected from their profit and loss accounts, resulting in non-payment of service tax.
• The adjudicating authority allowed the abatement of 85% of the value as per TRU letter 05.05.2008, but did not accept the claim of the assessee that the advertiser has paid service tax on behalf of the assessee and service provided to government agency is exempt and service tax is not levied on discount received by them.

Issue –

• Whether the appellant is required to pay service tax on advertisement and whether the adjudicating authority rightly allowed the abatement of 85% of the value?

Order –

• The Tribunal observed that in terms of Notification No.1/96-ST, the assessee is not liable to be included the amount paid for space and time in getting the advertisement published in print media. Therefore, the said amount is not includible in the value of taxable service provided by the assessee.
• Further, on discount received by the appellant, no service tax is payable as the same has not been received in consideration of providing the taxable service by the appellant. It was further found that the advertisers themselves have paid service tax on behalf of the appellant, therefore, if the same is demanded from the assessee, it would be double taxation on the service.
• As in the case in hand, the service tax has been paid by the advertisers on behalf of the appellant, therefore, same is treated as paid by the appellant. Accordingly, no demand is sustainable against the appellant .
• The services provided by the appellant to the Government, the appellant is liable to pay service tax as it was held in the case of Prithvi Associates v. Commissioner of Central Excise, Mumbai [2006 (1) S.T.R. 32 (Tri.-Mumbai)]. Hence the appeal filed by the assessee, is partly allowed and the appeal filed by the revenue is dismissed.