Service tax on advertising agency related to service pertaining to print media, Income Tax

[Biswajit Kar]

Dear Sir,

We are providing service to our client regarding the service related to print media.

Sir we book the space in newspaper on behalf of client.Print media service is exempted from service tax.

Suppose we book a space in times of India.The cost of bill of times of india is ₹ 100.AS print media service is exempted from service tax then TOI raised the bill for ₹ 100. As we provide the service on behalf of client so we provide the additional service like layout,design,paper setting etc.So apart from print media cost we add 15% as additional chages as commission.. So I charge ₹ 118 + service taxon 15% agency commission to client. .I have the registratin no under Advertising Agency Services.

Our billing patter is like this

Media Cost ₹ 100

Agency comm 18

Total bill value Rs 118

Service tax 15% 2.70

On agency commission

Total 120.70

Our audit has been compleated on the basis of above fact.But now Deptt is saying we have to pay service tax on ₹ 118 means Rs 118+17.70=135.70

We are the accrediated advertising agency of India News Paper society.The Guide line of INS is we have to raise the bill to client and collect the money from client and make the payment to media.What I am doing is the unanimously concept of advertising agency in india.

Department is saying they will go back for 5 years on the basis of their calculation.

Please advise

Posts / Replies

[CA Venkata prasad Pasupuleti]

Dear sir,

The practice adopted by you is absolutely correct.

S.tax is not liable on ₹ 100 as it is charged towards sale of space for advertisement in print media and agecny commision is alone liable for service tax.

However please check whether media from whom you are getting business is falls within the definition of 'Print media' u/s. 65B(39A) of Finance Act, 1994.

If department is not accepting your compliance, you can take the Show cause notice and contest the liability.

 

[Ganeshan Kalyani]

Also see the cost of litigation .