Advertising agency commission and limitation objections supported waiver of pre-deposit and stay of recovery pending appeal.

Commission received from another advertising agency was treated as not prima facie taxable as advertising agency service where the underlying service tax had already been discharged by the principal agency and the arrangement suggested only routed or ancillary consideration. The Board circular supporting such situations reinforced this prima facie view, and the demand was found not prima facie sustainable on taxability. The limitation objection also had prima facie force because the notice covered an earlier period. In light of these two factors, pre-deposit was waived and recovery was stayed pending appeal.

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Issues: (i) whether the commission received by the appellant from another advertising agency was prima facie taxable as advertising agency service; (ii) whether the demand was prima facie vulnerable on limitation; (iii) whether pre-deposit should be waived and recovery stayed pending appeal.

Issue (i): whether the commission received by the appellant from another advertising agency was prima facie taxable as advertising agency service.

Analysis: The appellant's case was that the service was rendered to the main advertising agency by way of creative inputs and that the entire service tax on the underlying consideration had already been discharged by the main agency. The arrangement indicated that the appellant was not directly providing the taxable service to the ultimate client in the manner suggested by the Revenue. The Board's circular protecting situations where tax had already been paid by the principal service provider also supported this prima facie view.

Conclusion: The demand was not shown to be prima facie sustainable against the appellant on this issue.

Issue (ii): whether the demand was prima facie vulnerable on limitation.

Analysis: The notice covered an earlier period and the appellant raised the plea that the extended demand was not justified. On the available material, the limitation objection was found to have prima facie force.

Conclusion: The limitation plea was accepted at the prima facie stage in favour of the appellant.

Issue (iii): whether pre-deposit should be waived and recovery stayed pending appeal.

Analysis: In view of the prima facie merits on taxability and limitation, insistence on pre-deposit was not warranted at that stage.

Conclusion: Pre-deposit was dispensed with and recovery was stayed during the pendency of the appeal.

Final Conclusion: The appellant obtained interim relief, with waiver of pre-deposit and stay of recovery, on a prima facie assessment that the demand was not sustainable and that the limitation objection had merit.

Ratio Decidendi: Where the principal service provider has already discharged service tax and the arrangement suggests only ancillary or routed consideration to another entity, the demand may be treated as not prima facie sustainable, especially when supported by the applicable Board circular and a credible limitation objection.

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