Advertising Corporation of India liable to pay Service Tax on Advertising Services to Government of India: CESTAT [Read Order]

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that M/s. The Advertising Corporation of India Private Limited, the appellant is liable to pay service tax on advertising services to Government of India.

The assessee is acting as advertising agency and engaged to procure advertisement for media only and earning commission @ 15% on the total bill raised on advertisement. The assessee is rendering service i.e. matter to be published in media towards advertisement.

The revenue was of the view that the assessee is availing 85% exemption on the value of taxable service from payment of service tax without any authority of law during the impugned period and also not incorporated the entire value of taxable service in their ST-3 return as detected from their profit and loss accounts, resulting in non-payment of service tax. Therefore, two show cause notices were issued to the appellant to demand service tax and to impose penalty on the appellant.

The adjudicating authority allowed the abatement of 85% of the value as per TRU letter dated 05.05.2008, but did not accept the claim of the assessee that the advertiser has paid service tax on behalf of the assessee and service provided to government agency is exempt and service tax is not levied on discount received by them.

Therefore, both sides are in appeal against the impugned orders, whereas the assessee is challenging the confirmation of demand of service tax paid on their behalf by the advertiser and service provided to the government is exempt from payment of service tax and no service tax is payable on the discount received by them. Revenue is in appeal on the ground that 85% abatement was not allowable to the assessee.

A Two-Member Bench comprising Ashok Jindal, Judicial Member and K Anpazhakan, Technical Member observed that “We hold that on the services provided by the appellant to the Government, the appellant is liable to pay service tax. The assessee is liable to pay service tax on the services provided to the Government of India and Rest of the demand against the assessee are set aside.”

To Read the full text of the Order CLICK HERE

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