No Service Tax can be Levied on Services Activities which Does not Fall Under Category of “Business Auxiliary Services” : CESTAT [Read Order]

The Hyderabad bench of the Customs, Excise, And Service Tax Appellate Tribunal (CESTAT) held that no service tax can be levied on the activities of the service which do not fall under the category of “Business Auxiliary Services”. 

Varadhi Advertisers Pvt Ltd, the appellant assessee was an advertising agency and are provider of services to various Government agencies and others by getting their advertisements published in various media channels. The Show cause notice was issued on a periodical basis by the adjudicating authority and the demands were confirmed. 

The assessee appealed against the order passed by the confirmation of demand by the Commissioner (Appeals). 

P. Rama Krishna, the counsel for the assessee contended that the entire activity was just a kind of trading activity wherein the assessee paid the charges up front to the print media and subsequently the assessee realizes the amount from the client. 

It was further submitted that the service rendered by the assessee will not fall under the category of Business Auxiliary Service and is not liable to pay the demand issued by the adjudicating authority. 

V.R. Pavan Kumar, the counsel for the revenue contended that the assessee’s services were like Business Auxiliary Services only and the assessee was acting as an agent of the print media and the discount given by the print media in their invoices was the commission amount received by the assessee. 

The bench observed that the amount of incentive received by the Advertising Agency from the print media had been under litigation and the Tribunals had been consistently holding that such incentives or discounts cannot be termed as Business Auxiliary Service. 

The two-member bench comprising R. Muralidhar (Judicial) and A.K. Jyotishi (Technical) held that the assessee was providing Business Auxiliary Services to the print media cannot legally sustain while allowing the appeal filed by the assessee. 

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