Bubna Advertisings Vs CST (CESTAT Delhi)
Identical issue had already been considered by the Tribunal in the case of Mccann Erickson India Pvt. Ltd. in which it has been held that the 15% discount extended by the broadcasters cannot be included for the purpose of charging service tax under the category of advertising agency from the clients.
FULL TEXT OF THE CESTAT JUDGMENT
The present Appeal challenges the Order-in-Original No. 05/2015 dated 30.01.2005. The appellant is engaged in rendering advertising agency service. They also indulge in the activity of sale of advertisement space, which is booked with various broadcasters for telecast of advertisements. The appellant normally gets a discount of about 15% from the quoted price for sale of advertisement time slots from the broadcasters. At the time of billing the customers for the time slots, the appellant marks up the rate by 2-4% of the cost at which they get the time slots from the broadcasters. There is no dispute that the appellant is already paying service tax on such marked up margins, considering the same as commissions. Revenue was of the view that the appellant is required to pay service tax by including the quantum of discount extended by the broadcaster, in the value of the advertisement of slot billed to the customers. Accordingly, a Show Cause Notice dated 18.10.2013 was issued demanding differential service tax. By including the discount, amounts for the period 2008-09 to 2012-13 the impugned order confirmed the demand of service tax amounting to Rs. 1,38,24,069/- alongwith interest and penalties under various sections of the Finance Act, 1994. Aggrieved by the above Order, the present Appeal stands filed.
2. In the above background, we heard Shri Rachit Jain, Ld. Advocate for the appellant as well as Mr. Amresh Jain, DR for Revenue.
3. The arguments advanced on behalf of the appellant are summarised below:-
(a) The appellant has already paid service tax on the difference between the amount billed by the broadcasters and the amounts billed by the appellant to the customer, considering the difference as agency commission. In addition to above, revenue is seeking to add the quantum of discounts given to the appellant by the broadcaster.
(b) He submitted that inclusion of the discount amount is not justified since this amount has not been recovered by the appellant from their customers. Neither is the said amount paid by them to the broadcasters.
(c) In this connection, he relied on the following case laws:-
