TaxTMI 
TaxTMI 
2026 (7) TMI 92
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....iefly stated facts of the present case are that the Appellant M/s Design Indya are registered with the Service Tax department for providing services of 'Advertising Agency' as specified under Section 65(105)(e) of the Finance Act, 1994 read with Section 174 of the CGST Act, 2017. 2.1 It appeared to the department that the Appellant were engaged in providing Business Auxiliary Services ('BAS') but had not paid service tax due on the commission received by them from Print Media. Thereafter, the department gathered information from the Appellant and found that the Appellant had received commission for providing space booked in Print Media, but were not discharging appropriate service tax due thereon in violation of Sections 66, 67, 68 & 70 of the Finance Act and Rules 4, 5, 6 & 7 of the Service Tax Rules, 1994 read with Section 174 of the CGST Act. 2.2 Further, the department searched the premises of the Appellant and recorded the statements of certain persons associated with the Appellant, namely Shri Indresh, Accounting Officer, Shri Vishal Gupta, CEO, Shri Baljeet Singh, Scheduling Head and Shri Rakesh Jain, Proprietor of the Appellant's firm. Shri Indresh, Accounting Officer....
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....e tax liability in terms of Section 67 of the Finance Act. 2.6 On the above allegations, two SCNs, detailed as above, were issued to the Appellant. The Appellant filed reply to the said SCNs vide their letter dated 27.11.2019 contesting the allegations made in SCNs and submitted that they are not liable to pay the service tax at all as their activities fall under Section 66D(g) of the Finance Act in the negative list and trade discount/commission is not liable to service tax in view of the decisions of various benches of the Tribunal. 2.7 After following the due process, the learned Adjudicating Authority/Principal Commissioner vide the impugned Order-in-Original confirmed the demands as proposed in the SCNs along with interest under Section 75 and penalties under Sections 76, 77 & 78 of the Finance Act. Aggrieved by the said Order-in-Original, the Appellant have preferred the present appeal. 3. Heard both the parties and perused the material on record. Both the parties have filed their written submissions along with the case-laws, which are taken on record. 4. The learned Counsel for the Appellant submits that the impugned Order-in-Original is not sustainable in law as....
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.... Media; they were not selling the space on behalf of newspaper but selling the space on their own behalf; the Appellant being accredited member of Indian Newspaper Society, were allowed trade discount @15% by the Print Media/Newspaper. He further submits that the Adjudicating Authority incorrectly and arbitrarily held that the trade discount allowed to the Appellant, are 'commission'; whereas, the Appellant neither received any commission nor any form-26AS under Section 194H of the Income Tax Act issued to them by the Print Media/Newspaper; the incentives were given depending upon space bought by the Appellant from the Print Media; the Appellant were not buying and selling space of Print Media on behalf of their clients but on their own behalf; and the trade discount received is a trading margin and cannot be considered as 'commission'. In this regard, he places reliance on the following decisions passed by various benches of the Tribunal: * Mudra Communications Pvt Ltd vs. CCE & ST - 2019TIOL-2521-CESTAT-Bangalore * Sindhu Cargo Services Ltd vs. CST - 2019 (24) GSTL 664 (Tri. Bang.) * Grey Worldwide (I) Pvt Ltd vs. CST - 2015 (37) STR 597 (Tri. Mum.) ....
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....ns submitted through ACES. He further submits that the Adjudicating Authority has failed to appreciate that the demand for the period 01.07.2012 to 31.03.2013 has been demanded based on figures taken from balance sheet, profit & loss account for the year 2012-13, which includes the period April 2012 to June 2012; the Adjudicating Authority has confirmed the demand for the period June 2012 to March 2016 without reducing the tax for the period April 2012 to June 2012. 4.8 Upon limitation, the learned Counsel submits that the Adjudicating Authority has erred in demanding service tax for the period July 2012 to March 2016 in respect of SCN dated 26.04.2018, by invoking the extended period of limitation as there were neither any willful mis-statement, suppression nor concealment of facts etc with an intent to evade the payment of tax. He also submits that the issue involved in the present case relates to interpretation of law and it is a settled law that extended period of limitation is not invocable when the issue relates to interpretation of statutory provisions. For this, he relies on the following case-laws: * Cosmic Dye Chemical vs. Collector of CE - 1995 (75) ELT 721 (....
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....ds (I) Travel Services vs. CCE & ors - 2014 (7) TMI 542 - Allahabad High Court He also submits that non-filing of returns by the Appellant is contemplated under Rule 7 of the Service Tax Rules, 1994, which amounts to suppression of facts and therefore, on this account also, invocation of extended period is justified. For this, he places reliance on the following decisions: ▪ Rajesh vs. Asst. Commr. of CGST & CE, Madhavaram Div., Chennai North - 2023-TIOL-9141-HC-MAD-ST ▪ Anil Gaur vs. CCE, Jodhpur - 2025-TIOL-1751CESTAT-DEL ▪ Avinash Azad Singh Tomar vs. CCE, Bhopal - 2025TIOL-1513-CESTAT-DEL ▪ Tata Steel Ltd vs. CST, Mumbai-I - 2015 (11) TMI 1049 - CESTAT Mumbai LB ▪ Valocity Propbuild Pvt Ltd vs. CGST, Noida - 2025 (8) TMI 802 - CESTAT Allahabad ▪ BCCI vs. CST, Mumbai-I - 2014-TIOL-1774-CESTAT-MUM ▪ BCCI vs. CST, Mumbai-I - 2015-TIOL-04-SC-ST 6. We have considered the submissions made by both the parties and perused the material on record as well as the case-laws relied upon by both the sides. We find that in the present case, following issues are involved which need to ....
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....edia has deducted TDS from so called commission paid to the Appellant. 8.1 Further, as regards the demand of service tax on incentives received by the Appellant, it has been consistently held that purchasing the space and selling the same cannot be considered to be an activity involving promotion to sell. Any incentives received as result of bulk purchase cannot be considered as providing a service. We note that this issue has been considered by the various benches of the Tribunal in the cases relied upon by the Appellant (as cited in para 4.5 above). In this regard, we may refer to some of those decisions. 8.1.1 In the case of Mundra Communication Pvt Ltd (supra), demand was set aside by the Tribunal by holding that service tax has been discharged on the entire amount received by the Appellant from their client advertiser for the services rendered by them; the amount which they got as discount from the Print/Electronic Media and passed on to their client-advertiser, is not chargeable to service tax as the same is not charged for their services. 8.1.2 In the case of Sindhu Cargo Services Ltd (supra), the demand on incentives and commission received based on total space pur....
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....ement can be done in various ways either through Print Media or through Radio or Television, etc. in order to fulfill the requirements of his client the advertising agency which is the service provider gets in touch with the appropriate media. In other words as far as the advertising agency is concerned, its client is not the media. In order to provide advertising services the advertising agency charges certain amounts from the clients. Such amounts are liable to Service Tax. With regard to the relationship between the advertising agency and the media, the advertising agency has to pay amount to the media and not the other way. To put it differently, the media such as broadcasting agency charges the advertising agency for insertion of the advertisement either in Print Media or in Television. In the present case, the media gives a discount of 15% to the advertising agency. If the Tariff rate is Rs. 100/-, it is sufficient the advertising agency pay the media Rs. 85/- along with Service Tax. The Service Tax component received from the advertising agency in turn is remitted to the exchequer by the media agency. The appellants have demonstrated that they have not received any amount fr....
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....ayable to the media as and when the claim is lodged and therefore, this amount cannot be construed as consideration received towards services rendered. Therefore, the confirmation of Service Tax demand on these amounts, i.e. volume discounts, rate difference and amounts written back cannot be sustained in law and accordingly, we set aside the same." 8.2 Further, we find that in fact, the Appellant received the trade discount and incentives from Print Media/Publishing House on achieving certain bulk targets and not for the services rendered to their clients. Such incentives and trade discounts are not related to the service rendered to their clients and have nothing to do with the rending of services by the Appellant to their client, and therefore, trade discount and incentives are not liable to be included as value of taxable services and hence, the Appellant are not liable to pay any service tax. The service tax shall not be liable to be paid if the amount in question (i.e. trade discount and incentives) is not recovered from the clients. The clients of the Appellant are those, on whose behalf the Appellant works or to whom the Appellant provides services in relation to adverti....
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....no discussion in the decision as to why the commission received would fall under "BAS". The decision also does not specify the particular subclause of Section 65(19) of the Finance Act that defines ""BAS". It also needs to be noted that on behalf of the appellant it was contented that no marketing or promotion was conducted by the appellant since it is the choice of the appellant to choose a particular CRS Company and that the customer also does not even know under which CRS system the ticket was booked, but there is no discussion on this aspect nor is there any discussion on the submission of the appellant that the amount received from the CRS Companies cannot be treated as deemed commission since it was merely an incentive and did not attract service tax. 83. These contentions as to whether the air travel agent is promoting the business of the airlines or the CRS Companies have been dealt with in the earlier portion of this order. The order also discusses whether the classification of service would fall under "air travel agents" services or under "BAS" and whether incentives paid for achieving the targets are taxable. 84. The inevitable conclusion, therefore, th....