Discounts and Incentives received by advertising agency

Grey Worldwide Pvt. Ltd v/s Commissioner of service Tax. [2015] 37 STR 597 (tri-Mumbai)

Discounts and Incentives received by advertising agency are not towards provision of services and therefore should not be levied to service tax.

FACTS:

The appellant, an Advertising agency placed advertisements in print/ electronics media on behalf of the advertisers and received agency commission . The demand was on accounts of volume discounts/rate difference received from media write back of the amounts in respect of payment not claimed by the media.

 HELD:

It was concluded that assessee was merely coordinating between media and advertiser. Service Tax Liability was discharged on agency commission received and there was no agreement or contract for promotion of media’s business activities or provision of any service.. It was held that incentive received from media without any contractual obligation to render any service cannot  be subjected  to service tax under the category of business auxiliary services as the amounts written back, the some were payable to the media as and when the claim was lodged and therefore it cannot be constructed as a consideration for services  rendered.