TaxTMI 
TaxTMI 
2025 (12) TMI 881
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....r advertising in both print and electronic media. 4. The Director General of GST Intelligence had carried out an investigation against the Respondent, wherein certain agreements which it had entered into with media houses were retrieved. On the basis of the said agreements, a case was made against the Respondent that it was receiving certain commission on the gross billed amount and thereafter certain amounts were being retained as remuneration/income. 5. As per Section 66D (g) of the Finance Act, 1994 (hereinafter, 'the Act') the activity of 'selling of space slots for advertisements in print media' was non-taxable. However, insofar as broadcasters are concerned, it is not in dispute that the service tax obligation was being discharged. 6. The issue that arose was in respect of a particular statement dated 24th September, 2018, which was recorded of Mr.Mohit Khurana, Manager (Finance) of the Respondent, wherein a statement was made that in respect of broadcasters and other media companies, upon achieving a particular target certain performance incentives were being given. 7. According to the Department, the incentives received by the Respondent translate to performing ....
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.... issue under consideration in the instant case has been held in favour of Nexus, hence, there is no requirement of discussing other ancillary/ consequential issues, viz. charging of interest, imposition of penalty etc. which depended upon the said prime issue. For this reason, no penalty is also being imposed upon Shri Jogesh Bhutani." 11. Pursuant thereto, the Department preferred an appeal against the OIO, before the CESTAT, and the CESTAT vide the impugned order held that the service tax would not be liable to be paid on the incentives received by the Respondent. The findings of the CESTAT are set out below: "7. The business arrangement of the respondent is simple. It acts as an agency for its clients, the advertisers. It helps them make media, print or podcast advertisements on various channels. For these services, it receives a commission on which it pays service tax and there is no dispute. The print and media channels through which it places the advertisements provide an incentive to the respondent if it attains certain targets in terms of turnover during the year. The case of the Revenue is that the respondent had agreed to do an act for the media channels and p....
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....various terms & conditions of the agreement including fulfillment of revenue target; (ix) that on fulfilling the specified target of revenue and other terms and conditions mentioned in each agreement, which may differ from Media to Media, they became eligible for getting incentive for a particular slab; (x) that the incentive received from print media is over and above the Agency Commission. which they had received in terms of basic Agreements. being approved and accredited Agency of INS; xi) that this was an incentive for them for getting the targeted business in the Media therefore they do not pass on any portion of such incentive to the Advertisers;" 13. In terms of the above statement, ld. Counsel for the Appellant submits that once a specific revenue target of advertisement was achieved, only then the incentives were given and hence this would constitute an additional service. 14. The Court has considered the matter. An advertising agency primarily books slots on electronic media and books space in the print media on behalf of its clients. The advertising plans are negotiated with the media houses, with the help of the advertising agency and ar....
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....a situation, or to do an act is nothing but a contractual agreement. A contract to do something or to abstain from doing something cannot be said to have taken place unless there are two parties, one of which expressly or impliedly agrees to do or abstain from doing something and the other agrees to pay consideration to the first party for doing or abstaining from such an act. Such contractual arrangement must be an independent arrangement in its own right. There must be a necessary and sufficient nexus between the supply (i.e. agreement to do or to abstain from doing something) and the consideration." 18. A perusal of the above would show that there are three components of 66 E(e) of the Act: i. Agreeing to refrain from an act; ii. Agreeing to tolerate an act or a situation; iii. Agreeing to do an act. 19. All the three components require a contract. In the present case, the contract though executed by the Respondent with the media house, is for and on behalf of the client. The Respondent is rendering services to its client and not to the media house. 20. Additionally, in W.P.(C) 7542/2018 titled Mahanagar Telephone Nigam Ltd. v. ....