TaxTMI 
TaxTMI 
2011 (11) TMI 297
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....ications Ltd., Pune is a service provider falling under the category of 'Advertising Agency Service'. Scrutiny of the appellant's records for the period April, 2006 to March, 2007 revealed that they had not discharged service tax liability on the gross amount received by them in respect of the services rendered resulting in short levy of Rs. 36,92,136/-. It was also observed that the appellant had wrongly availed CENVAT credit amounting to Rs. 20,442/- on vehicle maintenance/insurance. 2.1 Accordingly, show cause notice dated 21/10/2008 was issued demanding service tax amounting to Rs. 36,92,136/- and disallowing CENVAT credit amounting to Rs. 20,442/- under section 73 of the Finance Act, 1994 and Rule 14 of the CENVAT Credit Rules, 2004....
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....ax under Section 67 of the Finance Act, 1994. The appellant have not availed any service tax credit on the service tax paid by the advertisers. As the said credit is not at all related to the output services provided by the appellant, the customers were not charged service tax on the expense reimbursement charged in the bills. 3.2 The learned counsel also submitted a copy of the agency agreement they had entered into with one of the customers, namely, M/s. Kitchen Appliances India Ltd. and also the bills raised on the said client and also the bill raised by the advertiser on the appellant for broadcasting the advertisement on behalf of the appellant's client. The learned counsel further submitted that a perusal of these bills will make i....
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....ice provider to make payment on his behalf; (v) the recipient of service knows that the goods and services for which payment has been made by the service provider shall be provided by the third party: (vi) the payment made by the service provider on behalf of the recipient of service has been separately indicated in the invoice issued by the service provider to the recipient of service: (vii) the service provider recovers from the recipient of service only such amount as has been paid by him to the third party; and (viii) the goods or services procured by the service provider from the third party as a pure agent of the recipient of service are in addition to the services he provides on his own account. ....
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....lf of the client, third party costs, etc. will be billed to the client with the agency commission at the rate of 10% of the actual cost. It is further provided that whenever the agency is required to make advance payments to models, photographers, hoarding contractors, filmmakers, etc. on behalf of the client, these shall be paid by the client in advance. From the above agreement it does not come out clearly that the agency is working as a pure agent of the client so as to attract the provisions of sub-rule (2) of Rule 5 of the Service Tax (Determination of Value) Rules, 2006 especially when the client pays the agency, advance payments for payments to be made by the agency to various others. 6.2 The value added tax practiced in India is ....