No Service Tax On Buying Or Selling Of Space In Print Media, Receiving Incentives On Meeting Targets: CESTAT

The Bench of Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that the assessee cannot have an obligation to the media houses. All that is paid by the media houses is, if the assessee achieves particular target while carrying out its business for its clients, the media house gives some incentives.

Section 66E(e) of the Finance Act, 1994.covers as declared services only such cases where there is an obligation under an agreement on the assessee to carry out an act or to tolerate an act, added the Tribunal.

The assessee/respondent is providing advertising agency service and selling of space and time slots for advertisement services.

The assessee helps them make media, print or podcast advertisements on various channels. For these services, it receives a commission on which it pays service tax.

The print and media channels through which it places the advertisements provide an incentive to the assessee if it attains certain targets in terms of turnover during the year.

DGGI formed an opinion that these incentives would mean that the assessee performed business promotion of the media owners which was a declared service under section 66E(e) of the Finance Act, 1994.

A show cause notice was issued to the assessee but after considering the reply filed by the assessee the Commissioner (Adj) of CGST, Delhi South Commissionerate dropped the proceedings.

The revenue has challenged the order passed by the Commissioner (Adj) of CGST, Delhi South Commissionerate before the Tribunal.

The Tribunal found that the assessee has no agreement with the media houses to meet any target nor is there any obligation on the media house to provide incentives/ discount. In fact, the assessee's clients are the advertisers. They decide and approve the media plans suggested by the assessee. Therefore, the assessee has no discretion to get the advertisements published in a particular newspaper or broadcast through channels of its choice.

Section 66E(e) covers as declared services only such cases where there is an obligation under an agreement on the assessee to carry out an act or to tolerate an act. Such is not the case here, opined the bench.

In view of the above, the Tribunal dismissed the appeal.

Case Title: Principal Commissioner of CGST & Central Excise- Delhi-IV

Case Number: SERVICE TAX APPEAL NO. 51901 OF 2019

Counsel for Appellant/ Department: Harsh Vardhan

Counsel for Respondent/ Assessee: Vanadana Bhandari

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