Finance Bill 2010 inserted clause (zzzzq) in Section 65(105) of the Act so as to define taxable service as “ service provided or to be provided to any person, by any other person, through a business entity or otherwise, under a contract for promotion or marketing of a brand of goods, service, event or endorsement of name, including a trade name, logo or house mark of a business entity by appearing in advertisement and promotional event or carrying out any promotional activity for such goods, service or event.”
Thus, the ingredients of this taxable service are:
§ Service may be provided to any person, by any other person
§ Service may be provided through a business entity or otherwise-In other words, the celebrity may have floated a company or firm which contracts with businesses needing promotional services of the celebrity. In such cases, also, the same will be in taxable net.
§ Service is provided under a contract for promotion or marketing of a brand of goods, service, event or endorsement of name, including a trade name, logo or house mark of a business entity. That is service receiver should be a ‘business entity’. If business is owned by an individual and service is provided for that business, there will be no service tax attracted.
§ Service is provided by appearing in advertisement and promotional event or carrying out any promotional activity for such goods, service or event.
§ For the above purposes, “brand” includes symbol, monogram, label, signature or invented words which indicate connection with the said goods, service, event or business entity;
The definition of “brand” given above is inclusive. Its ordinary meaning is “a trademark or distinctive name identifying a product or a manufacturer”. The inclusive definition expands the meaning of this term to cover “symbol, monogram, label, signature or invented words which indicate connection with the said goods, service, event or business entity”,
Commercial advertisement has taken different shapes and forms. Apart from the advertisements in print and visual media and sponsorship, one of the recent trends is to advertise a brand (i.e. of goods, services, events, business houses bearing a particular brand name or house name) usually by using a celebrity (such as sportsperson, film stars, etc.) to associate him/her with the brand. The intended impression that is created in the minds of customers or users is that the products and services of that brand have the level of excellence comparable to that of the celebrity. Unlike in case of advertisements using models, a brand ambassador works under a contract of a reasonably long period, where under he is not only required to advertise the goods or service in different media but also to attend promotional, product launching events, make appearances in public activities related to the brand or the brand holder or use such goods or services in public. The contractual amounts are substantial and it may not only involve an individual celebrity but a group of celebrities such as a cricket team or the actors of a successful film.
Distinction between “Promoting a ‘brand’ of goods, services, events, business entity” service and “Business auxillary services” – The promotion or marketing of sale of goods produced, provided or belonging to a client and promotion or marketing of services provided by the client are already covered under Business Auxiliary Services (BAS). Such activities would continue to remain classified under BAS. The newly proposed service has a wider coverage than BAS in the sense that mere promotion of a brand would attract tax under this service even if such promotions cannot be directly linked to promotion of a particular product or service. Many companies/corporate houses (for example Sahara, ITC or Tatas) are associated with a range of activities including production/marketing/sale of goods, provision of services, holding of events, undertaking social activities etc. If the brand name / house mark etc. is promoted by a celebrity without reference to any specific product or services etc., it is difficult to classify it under BAS. Such activities, like mere establishing goodwill or adding value to a brand would fall under this newly introduced service.
Hi,
I subscribe a Vonage phone service. As per advertise, on referel by friend I was supposed to get one month free service from Vonage. I got the free service for month of october but they charged the taxes (13%) for the same in next month bill. They added the taxes on my credit card account for November month bill but didn’t mention on invoice. So is it fair ? Am I leagally eligible to get the refund for taxes they charged me for free promotional offer ?
Pls help me.