CESTAT Rules Service Tax Not Applicable On Buying-Selling Space In Print Media
Cites Section 66E(e) of the Finance Act, 1994, to reach the judgment
The New Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that service tax is not applicable on buying or selling of space in print media and receiving incentives on meeting targets.
The matter came up regarding the assessee/respondent, Nexus Alliance Advertising, which sells space and time slots for advertising services and offers agency services. It assists in creating print, media, and audio ads for a variety of platforms and pays service tax on the commission.
The respondent receives an incentive from print and media outlets where ads are placed if it meets specific yearly turnover goals.
According to assessment of the Directorate General of Goods and Service Tax Intelligence (DGGI), the incentives indicated that the respondent promoted the media owners’ businesses. It constituted a declared service under Section 66E(e) of the Finance Act, 1994.
However, when assessee received a show-cause notice, the Delhi South Commissionerate’s Commissioner (Adj) of the Central Goods and Services Tax (CGST) halted the proceedings after reviewing the assessee’s response.
The revenue department contested the CGST Commissioner’s decision.
The CESTAT’s two member bench of Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) held that the assessee and the media outlets did not have an agreement to fulfil any goals or to offer incentives or discounts.
Meanwhile, the advertisers were the assessee’s clients. Since the media plans proposed by the assessee were decided and approved by them, the assessee was powerless to choose if the ads should be broadcast on its preferred channels or appear in a specific newspaper.
The tribunal observed that the assessee was not obligated to the media outlets. Media companies paid if the assessee met the specific goals while conducting business for its clients. Else, they provide incentives.
Thus, while dismissing the appeal, the bench held that the Finance Act covered only declared services if the assessee was required by agreement to perform the service.