Service Tax on advertising agent service

[Sudhir Kumar]

The department has issued Multiple Show Cause Notice to a client in the matter of service tax from advertising agency service. One show cause notice for the period 2008-09 to 2011-12 amounting to Rs. 79 Lacs was issued in 2013 by the Additional/Joint Commissioner, another show cause notice for the period 2008-09 to 2013-14 amounting to Rs. 8 crore was issued in 2015 by the Commissioner and the third one for the period 2014-15 amounting to Rs. 1.04 Crore was issued in 2017 to the same client on same matter. The client/noticee during the period 2008-09 to 2014-15 was engaged in providing taxable services as Advertising agency. They noticee claim that only 15% of the consideration amount is given to them as commission while rest amount was given to the print media by the recipient hence service tax is applicable on only 15% of the consideration amount which they have received. But the department has issued notice taking whole amount of consideration as taxable value and computed service tax on that:- the queries are

(i) Is single adjudication possible for all 03 show cause notice issued by the department for different period on similar issued to the similar person?

(ii) whether the noticee is liable for tax only on 15% of the consideration amount received from the Print media as they claim or whole amount of consideration will come under the net of service tax?

(iii) Incentives received by the noticee from different print media due to achieving target withing due time, will come under the purview of service tax?

Please guide.

AI Summary

Advertising Agency Challenges Tax Notices: Debating Taxable Amount and Single Adjudication for 2008-2015 Service Tax Liabilities A client in the advertising agency sector received multiple show cause notices from the tax department regarding service tax liabilities for different periods between 2008-2015. The notices claim the entire consideration received is taxable, while the client argues that only 15% of the amount, which they receive as commission, should be taxed. The discussion includes whether a single adjudication is possible for all notices, the taxable amount, and whether incentives from print media are taxable. Respondents suggest that single adjudication is common, incentives are taxable, and further professional guidance is recommended for litigation.