15% Discount Extended by Broadcasters to Advertising Agency shall be excluded for Charging Service Tax: CESTAT [Read Order]

Advertising Agency - Taxscan

The Delhi bench of the Customs, Excise and Service Tax appellate Tribunal ( CESTAT ) in Bubna Advertisings v. CST, Service Tax, Delhi, held that 15% discount extended by the broadcasters cannot be included for the purpose of charging service tax in the hands of the advertising agency.

The appellant is engaged in rendering advertising agency service and also indulge in the activity of sale of advertisement space, which is booked with various broadcasters for telecast of advertisements. They normally 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.

The department took a 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.

Before the Tribunal, the assessee contended that the 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.

After hearing both sides and perusal of record, the bench noted that the Tribunal in the case of Mccann Erickson India Pvt. Ltd, discussed a similar issue and 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.

Following the above decision, the Tribunal decided the matter in favour of the assessee.

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