No Service Tax on Advertising Agency against Amount Payable to Media Companies on Behalf of their Clients: CESTAT [Read Order]
The tribunal ruled that the authorities below had legitimately invoked the extended period because the appellant had neglected to register for service tax and to file their ST-3 returns.
![No Service Tax on Advertising Agency against Amount Payable to Media Companies on Behalf of their Clients: CESTAT [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/03/ad-agency.jpg "No Service Tax on Advertising Agency against Amount Payable to Media Companies on Behalf of their Clients: CESTAT [Read Order]")
The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that an advertising company is exempt from paying service tax on the money owed to media businesses on behalf of its clients since it is a pure agent. The assessee, Raj Kumar Jain, sells space for print media advertisements as part of his revenue-generating activities. The department found that...
The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that an advertising company is exempt from paying service tax on the money owed to media businesses on behalf of its clients since it is a pure agent.
The assessee, Raj Kumar Jain, sells space for print media advertisements as part of his revenue-generating activities. The department found that the assessee's services did not fall under the type of services listed in the negative list under section 66D of the Finance Act at the time of the inquiry and subsequent investigation.
The assessee received a show-cause notice. The demand was validated by the initial adjudicating body. The assessee appealed the original adjudicating authority's decision to the Commissioner (Appeals), who denied the appeal. Before the Tribunal, the assessee has contested the Commissioner's (Appeals) ruling.
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The assessee argued that the government had not presented any concrete proof that the assessee had concealed the facts in order to avoid paying service tax. Therefore, the prolonged statute of limitations cannot be revoked. However, the department argued that it was authorized to use the proviso to Section 73 of the Finance Act of 1994 if the assessee did not file returns as required by Rule 7 of the Service Tax Rules of 1994.
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The Tribunal noted that the assessee is undoubtedly offering print media advertising services. These services are listed negatively in section 66(b) of the Finance Act's subclause (g). As a result, the demand for payment for services rendered to print media was incorrectly made in the show cause notice. The Tribunal noted that the Department had not provided any evidence in the record to support the claim that the assessee had a malicious intent to avoid paying taxes on the commission money. The department's whole load has not been released.
The two-member bench consisting of President Dilip Gupta and Technical Member P. V. Subba Rao has noted that the assessee has acknowledged their obligation to pay service tax on the commission they earned while providing advertising agency services to print medium but has continued to dispute it on the grounds of restriction.
While granting the appeal, the tribunal ruled that the authorities below had legitimately invoked the extended period because the appellant had neglected to register for service tax and to file their ST-3 returns. Although the Finance Act's Section 70 has been triggered, the assessee's services are deemed to be on the negative list. As a result, the appellant was only required to pay the commission and not tax on the money received for providing advertising agency services to the print medium.
To Read the full text of the Order CLICK HERE
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