The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that buying/selling of space in print media is not subject to service tax from 01.04.2013 to 30.06.2017.
The bench of Binu Tamta (Judicial Member) and P. V. Subba Rao (Technical Member) has observed that the assessee has no discretion to get the advertisements published in a particular newspaper or broadcast through channels of its choice. The assessee, therefore, cannot have an obligation to the media houses. All that is paid by the media houses is, if the assessee achieves a particular target while carrying out its business for its clients, the media house gives some incentives.
The Director General of GST Intelligence investigated the respondent/assessee and found that during the relevant period it had booked advertisements for different advertisers to be printed in media or broadcast on radio, television etc.
The assessee entered into agreements with various advertisers. As per these agreements, the respondent does the media planning and media buying on behalf of its clients (advertisers) in print, radio and online. For rendering these services, the assessee was paid on agency commission on which it paid service tax.
However, buying or selling of space in print media was not subject to service tax as it was in the negative list during the relevant period.
However, if the department buys space or time from various media for its clients and meets certain targets, the respondent receives incentives or volume discounts from the media on them.
DGGI formed an opinion that these incentives would mean that the respondent performed business promotion of the media owners which was a declared service under section 66E(e) of the Finance Act, 1994.
Therefore, a show cause notice was issued proposing recovery of service tax from the assessee covering the period 01.04.2013 to 30.06.2017 invoking extended period of limitation under proviso to Section 73(1) of the Finance Act. Interest was demanded under Section 75 of the Finance Act and penalties were proposed under Sections 76, 77 and 78 of the Finance Act.
After considering the submissions made in reply to the show cause notice and during personal hearing, the Commissioner dropped the proceedings.
The department filed this appeal on the grounds that the Commissioner failed to appreciate that all the schemes offered by print media are accepted and signed by both parties. The media agency agreement gave authority to the respondent to carry out specific activities. The incentive provided by the media houses is for accepting an obligation to do an act and, therefore, the same is a declared service under Section 66E(e) of the Finance Act.
The tribunal noted that 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.
The tribunal while dismissing the appeal of the department held that the impugned order passed by the Commissioner is correct and calls for no interference.
Case Details
Case Title: Principal Commissioner Of Cgst & Central Excise-Delhi-Iv Versus M/S Nexus Alliance Advertising & Marketing Pvt Ltd
Case No.: Service Tax Appeal No. 51901 Of 2019
Date: 17/04/2025
Counsel For Appellant: Harsh Vardhan, Authorised Representative
Counsel For Respondent: Vanadana Bhandari, Advocate
Read More: Club And Members Are Not Separate: CESTAT Directs Club To Refund Service Tax To Members
