The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad consisting of R. Muralidhar (Judicial Member) and A.K. Jyotishi (Technical Member) ruled that incentives received by advertising agencies from print media cannot be termed as business auxiliary service.
BACKGROUND
The Appellants are registered as Advertising Agency and are providers of services to various Government agencies and others by getting their advertisements published in various media channels. Mostly they take up this work for Government of Andhra Pradesh.
The Appellant is basically providing service to the Government of Andhra Pradesh and some other clients. The material to be published in the print media is given by such clients. The Appellant approach the print media like various daily newspapers and get these advertisements published. For booking such spaces with the print media, the Appellant pays the advertising charges upfront to the print media. After about sixty days, the Government of Andhra Pradesh and other clients, being satisfied that their advertisements have been properly published in newspapers, pass the bills raised by the Appellant.
The appellant submits that the services provided by the Appellant are in the nature of Business Auxiliary Services only. The Appellant is acting as an agent of the print media and the discount given by the print media in their invoices is the commission amount received by the Appellant. While there may not be any direct Agreement/Contract between the Appellant and the print media, by way of being a member of the Indian Newspaper Society, the Appellant gets the concession of lower rate for the advertisements provided in by them for publication in the newspapers.
OBSERVATION
“We hold that the confirmed demand on the ground that the Appellant was providing Business Auxiliary Services to the print media cannot legally sustain. Therefore, we allow these Appeals filed by the Appellant with consequential relief, if any, as per law,” the CESTAT said.
Case Title: Varadhi Advertisers Pvt Ltd Versus Commissioner of Central Tax Hyderabad – II
Citation: Service Tax Appeal No. 757 of 2009
