niket (FINAL STUDENT) (82 Points)
11 June 2016The firm works as a advertising agent for the different regional newspapers circulated in Kashmir and the Seven Sister States namely : Assam, Mizoram, Nagaland, Sikkim , Manipur, Meghalaya & Tripura .
The firm earns commission at a specific rate on the business(i.e. advertisement) brought to such newspaper.
The agency services related to advertisement is strictly towards print media .
Kindly confirm whether service tax is liable or not ??
Sri Harsha
(Student)
(5 Points)
Replied 12 June 2016
If i am not wrong there will be no service tax liable because it is listed under negative list
Please let me know if i am wrong because i am learning about service tax now and if my answer is wrong any one correct where i am wrong please.
Thanks
karan jit singh
(Consultant)
(1299 Points)
Replied 13 June 2016
| Originally posted by : niket | ||
 |
The firm works as a advertising agent for the different regional newspapers circulated in Kashmir and the Seven Sister States namely : Assam, Mizoram, Nagaland, Sikkim , Manipur, Meghalaya & Tripura . The firm earns commission at a specific rate on the business(i.e. advertisement) brought to such newspaper. The agency services related to advertisement is strictly towards print media . Kindly confirm whether service tax is liable or not ?? |
 |
yes.
Regards
Karanjit Singh | +91-7503588224
Read more at: /forum/kkc-applicability-at-glance-361370.asp
karan jit singh
(Consultant)
(1299 Points)
Replied 13 June 2016
| Originally posted by : karan jit singh | ||
|
Originally posted by : niket The firm works as a advertising agent for the different regional newspapers circulated in Kashmir and the Seven Sister States namely : Assam, Mizoram, Nagaland, Sikkim , Manipur, Meghalaya & Tripura . The firm earns commission at a specific rate on the business(i.e. advertisement) brought to such newspaper. The agency services related to advertisement is strictly towards print media . Kindly confirm whether service tax is liable or not ?? yes. Regards Karanjit Singh | +91-7503588224 Read more at: /forum/kkc-applicability-at-glance-361370.asp |
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The only exemption I can relate your case is on transportation service.
Services by way of transportation by rail or a vessel from one place in India to another of the following goods -
(a) petroleum and petroleum products falling under Chapter heading 2710 and 2711 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986);
(b) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap;
(c) defence or military equipments;
(d) postal mail or mail bags;
(e) household effects;
(f) newspaper or magazines registered with the Registrar of Newspapers;
(g) railway equipments or materials;
(h) agricultural produce;
(i) foodstuff including flours, tea, coffee, jaggery, sugar, milk products, salt and edible oil, excluding alcoholic beverages; or
(j) chemical fertilizer and oilcakes;
| Regards Karanjit Singh | +91-7503588224 Read more at: /forum/kkc-applicability-at-glance-361370.asp |
karan jit singh
(Consultant)
(1299 Points)
Replied 13 June 2016
Chirag Parmar
(Service)
(65 Points)
Replied 13 June 2016
Service tax is not applicable on selling of space for advertisement in print media as per entry (g) of section 66D.
However, in the instant case, the transaction is of commission on sale of space for advertisement in print media which is service by mediator or agent. Hence, it is not get covered under this entry. If News paper company is providing service directly then it can get covered in this entry.
So, service tax would be applicable in the instant case. However, it may be noted that Chapter V of the Finance Act, 1994 is not applicable to the state of Jammu and Kashmir.
karan jit singh
(Consultant)
(1299 Points)
Replied 13 June 2016
| Originally posted by : Chirag Parmar | ||
|
Service tax is not applicable on selling of space for advertisement in print media as per entry (g) of section 66D. However, in the instant case, the transaction is of commission on sale of space for advertisement in print media which is service by mediator or agent. Hence, it is not get covered under this entry. If News paper company is providing service directly then it can get covered in this entry. So, service tax would be applicable in the instant case. However, it may be noted that Chapter V of the Finance Act, 1994 is not applicable to the state of Jammu and Kashmir. |
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Disagree with the above opinion. Even in the case of J&K ST is leviable.
Regards
Karanjit Singh | +91-7503588224
kumar bharosa nandan
(2 Points)
Replied 03 September 2016
The Party is rendering taxable service under the category of "advertising agency service". The 'advertising agency' entered into contract with their clients for providing "advertisement agency service". The 'Advertising agent' render 'advertising agency service' to various clients in the form of creative agency wherein, they create advertisement by themselves or their third party media agency wherein, they do media printing and/ or buying for advertisement to be published in print/electronic media. They are receiving 15% Agency Commission from authorized Broadcasting and Print media as the case may be.
In such a case, a person or an organization (say, ABC Ltd.) who want to advertise their product approaches an 'Advertising agency'. Therefore ABC Ltd. want to avail the services of the 'Advertising agency' becomes the client of the 'advertising agency'. In other words, the 'Advertising agency' is the Service Provider whereas ABC Ltd. becomes the Service Receiver.
The advertisement can be done in various ways either through Print Media or through Radio or Television, etc. In order to fulfil the requirements of his client (ABC Ltd.) the 'advertising agency' being 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 this case the client of the 'advertisiing agency' is ABC Ltd. This aspect can be further supported with the fact that it is ABC Ltd who is deducting the TDS under the Income Tax Act. This proves that the professional service of 'advertising agency' iis being providfed by the 'Advertising agency' to ABC Ltd.
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 applicable Service tax. (Advertising service by "Print media" is exempted)
It can be easily noticed that the 'Advertising agency' has not received any amount from the media nor the Media has paid any consideration to the 'Advertising agency'. The 'Advertising agency' has only availed the discount of 15% from the MEDIA. Perhaps the word “Discount” is very often mis-construed as "Commission".
It may be understood here that "commission" is received if any service is rendered. In the instant case, the "Advertising agent" has purchased the SPACE or TIME-SLOT for Advertisement, from the Media. Hence, no service is rendered by the 'Advertsing Agency' to the media.
Now for the calculation of Service Tax, the gross amount received by the 'Advertising agency' (Service provider) from ABC Ltd. will be the value of the taxable service. Moreover, as the consideration (gross amount) received by the 'Advertising agency' has been shown as an Income in the Profit & Loss A/c is sufficient to be charged with Service tax on the entire consideration received.
The arguement of the 'Advertiosing agency' that the maount of 85 percent which it pays to the Media for the purchase of SPACE or TIME-SLOT (as the case may be) is claimed as the reimbursement of the expenditure made by them is nullified as the said consideration has been shown as an income in the Profit & Loss A/c.
The exemption from the payment of service tax is plausible under the "reimbursement" concept where the 'Advertisng agency' fulfills all of the stipulations prescribed for the "pure agent" under Service Tax (Determination of Valuation) Rules, 2006.
Other than the above, if the 'advertsing agency' receives any consideration from the Media as a COMMISSION for arranging/finding Customers for the Media in relation to their Sale of SPACE or TIME-SLOT (as the case may be) , the said consideration amount received by the 'Advertsing Agency' is also liable to Service Tax under the Taxable services of "business auxilliary service".
Note:
(a) The activity of "Selling of SPACE or TIME-SLOTS for advertisements" is distinct from the "ADVERTSING AGENCY" Service.
(b) While the former is classified under sub clause (105)(zzzzm) of Section 65 of the Finance Act, 1994 the latter is classified under (105)(e) of Section 65 of the Finance Act, 1994.
(c) The activity of the MEDIA is "Selling of SPACE or TIME-SLOTS for advertisements"
(d) The activity of the 'Advertising agency' is to make necessary arrangements to have the "matter" of its client advertised in the Media. The activity of the 'Advertising agency' comprises of designing, conceptualising, developing the 'matter for advertisement' to its requiired shape, size, etc and booking/purchasing of SPACE or TIME-SLOT from the Media as the case may be to get the 'matter of advertisement' advertised.
Regards,
Wise Man
( 9853749281 )
CAclubindia
