Service Tax Not Applicable on Buying or Selling of Space in Print Media: CESTAT [Read Order]

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has  held that service tax not applicable on buying or selling of space in print media and receiving incentives on meeting targets.

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The assessee/respondent, Nexus Alliance Advertising, sells space and time slots for advertising services in addition to offering advertising agency services. The assessee assists them in creating print, media, and audio ads for a variety of platforms. It pays service tax on the commission it receives for these services.

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The assessee receives an incentive from the print and media outlets where the ads are placed if it meets specific turnover goals for the year. According to DGGI's assessment, these incentives would indicate that the assessee promoted the media owners' businesses, which constituted a declared service under section 66E(e) of the Finance Act of 1994.

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The assessee received a show-cause notice, however the Delhi South Commissionerate's Commissioner (Adj) of CGST halted the proceedings after reviewing the assessee's response.Before the Tribunal, the revenue has contested the decision made by the Commissioner (Adj) of the CGST, Delhi South Commissionerate.

The Tribunal concluded that the assessee and the media outlets did not have an agreement to fulfill any goals or to offer incentives or discounts. Actually, the advertisers are the assessee's clients. The media plans proposed by the assessee are decided upon and approved by them. The assessee is therefore powerless to choose whether to have the ads broadcast on its preferred channels or appear in a specific newspaper.

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The two member bench of Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) has found that the assessee is not obligated to the media outlets. Media companies only pay if the assessee meets specific goals while conducting business for its clients; otherwise, they provide incentives.

While dismisisng the appeal, the bench held that Section 66E(e) of the Finance Act of 1994 only covers declared services in situations where the assessee is required by agreement to perform an act or to tolerate an act.

To Read the full text of the Order CLICK HERE

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