TMI Blog2020 (10) TMI 1301X X X X Extracts X X X X X X X X Extracts X X X X ..... e for advertisement' cannot be effectively accomplished without designing/fabrication/production. Thus such ancillary activities having a direct and proximal nexus with 'selling of space for advertisement'. Value of supply in case trade discount/additional discount/agency commission is deducted in the invoices raised in the name of the advertising agency by the TV / Radio/ Outdoor Company/ company - HELD THAT:- In view of the legal provisions, the commission shall form the part of taxable value and discount of any kind is excluded from the taxable value subject to the fulfillment of the conditions laid down in the said legal provisions. Hence in-bills discounts and discount established vide agreement before the time of supply subject to the reversal of ITC by the recipient is allowable deduction from the value of the supply. Taxability on value/volume based discounts in form of credit notes after the date of invoice - HELD THAT:- The registered person who had issued a credit note, can adjust his tax liability by following the procedure, subject to the condition that incidence of tax on such supply, has not been passed on to any other person, Thus, it is observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017, within a period of 30 days from the date of service of this order. RULING 1. This is an application under Sub-Section (1) of Section 97 of the CGST/SGST Act, 2017 (herein after referred to as Act) and the rules made thereunder filed by M/s Harmilap Media (P) Ltd, 2nd Floor, C-24, Medo Plaza, Rajpur Road, Dehradun seeking an advance ruling on classification, applicability of notification, value of supply rate of tax thereon on various mode of agreements as mentioned there under:- i. the advertising agency purchases time/space from Radio Broadcaster or Television Channel for its clients. Radio Broadcaster or Television Channel raised bill in the name of advertising agency, which may or may not show trade discount/additional trade discount. The GST is charged on net amount after all type of discount (if any). Agency raised bill in the name of the client at Govt/Market/Customerized/Deal rates. In this bill advertising agency may show some trade discount/additional trade discount/commission. The GST is charged on net amount after all types of discounts (if any). What will be the classification and tax rate on this supply. ii. the advertising agency purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al trade discount (if any) and its media buying charges/agency charges separately. Both are added and GST is charged on sum of both amounts. What will be the classification and tax rate on this supply. vi. the advertising agency purchases time/space from Outdoor Company for its clients. Outdoor Company raised bill in the name of the client, whose advertisement is telecasted/broadcasted. The bill may show advertising agency charges/discount/share to be paid to agency. There may be a case, in which Outdoor Company 1 may not show the agency charges/discount/share paid to the agency. Agency raised a separate bill for its share. The GST is charged on the amount after discount/additional discount (if any). What will be the classification and tax rate on this supply. vii. the advertising agency purchases time/space from Internet Company for its clients. Internet Company raised bill in the name of advertising agency, which may or may not show trade discount/additional trade discount. The GST is charged on net amount after all type of discount (if any). Agency raised bill in the name of the client at Govt/Market/Customerized/Deal rates. In this bill advertising agency may show som ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Media Company amount, discount/additional trade discount (if any) and its media buying charges/agency charges separately. Both are added and GST is charged on sum of both amounts. What will be the classification and tax rate on this supply. xii. the advertising agency purchases time/space from Print Media Company for its clients. Print Media raised bill in the name of the client, whose advertisement is telecasted/broadcasted. The bill may show advertising agency charges/discount/share to be paid to agency. There may be a case, in which Print Media Company may not show the agency charges/discount/share paid to the agency. Agency raised a separate bill for its share. The GST is charged on the amount after discount/additional discount (if any). What will be the classification and tax rate on this supply. xiii. the advertising agency purchases messages/personal communication in the form of audio, video or text or image or in any other way from Telecom/Internet/Other Company's for its clients. Telecom/Internet/Other Company raised bill in the name of advertising agency, which may or may not show trade discount/additional trade discount. The GST is charged on net amount af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above questions, at the time of making payment to TV/Radio/Outdoor Company / Publication/ Internet/Telecom/Other company. 1.4 What will be the taxability of value/volume based discount received by the advertising agency, from TV/Radio/Outdoor Company/Publication/Internet/Telecom/Other company in the form of credit notes issued after the date of invoice. 1.5 Whether the supply made by the advertising agency as mentioned in aforesaid questions to the Central Government, State Government, UT or Local Authority or Government Authority or a Government Entity, by way of any activity in relation to any function entrusted to a Panchyat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution is exempted from GST in terms of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time). 1.6 In specified cases where the answer to question 1.5 is in affirmative, then whether supply made by TV/Radio/Outdoor Company/Publication/Internet/Telecom/Other company to the advertising agency is also exempted in terms of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re: Scheme of Classification of Services S.No. Chapter, Section, Heading or Group Service Code (Tariff) Service Description (1) (2) (3) (4) 338 Group 99836 Advertising services and provision of advertising space or time 339 998361 Advertising Services 340 998362 Purchase or sale of advertising space or time, on commission 341 998363 Sale of advertising space in print media (except on commission) 342 998364 Sale of television and radio advertising time 343 998365 Sale of internet advertising space 344 998366 Sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conjunction with each other in the ordinary course of business, one of which is a principal supply; (ii) Section 2(90) of the Act ibid principal supply means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary; (iii) Section 8 of the Act ibid: The tax liability on a composite or a mixed supply shall be determined in the following manner, namely:- (a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and (b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. On analysis of legal provisions various mode of agreements, we observe that in case the designing/fabrication/production is bundled with the services provided in question (i) to (xv),supra, then the same falls under 'composite supply' in as much as services of 'selling of space for advertisement' constitutes the predominant element and therefore becomes the principal supply and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the supply shall not include any discount which is given,- (a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and (b) after the supply has been effected, if,- (i) such discount is established in terms of on agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and (ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier been reversed by the recipient of the supply. 9.1 In view of the legal provisions (supra), the commission shall form the part of taxable value and discount of any kind is excluded from the taxable value subject to the fulfillment of the conditions laid down in the said legal provisions . Hence in-bills discounts and discount established vide agreement before the time of supply subject to the reversal of ITC by the recipient is allowable deduction from the value of the supply, 10. As regard to the taxability on cash discount, the issue has been discussed in para 9 (supra), 11. As regard to the taxability on value/volume based discounts in form of credit note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the central tax leviable thereon under sub-section (1) of section 9 of the said Act, as is in excess of the said tax calculated at the rate as specified in the corresponding entry in column (4) of the said Table, unless specified otherwise, subject to the relevant conditions as specified in the corresponding entry in column (5) of the said Table, namely:- SI.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (percent) Condition 1 2 3 4 5 3 Chapter 99 Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices provided by the DAVP approved agencies on campaign for creating awareness for prevention of diseases to the Health Department is covered under the said notification in as much as 'Public Health' is a function entrusted to local authority under Article 243W read with the Twelfth Schedule S.No. 6. Accordingly we observe that the advertising agency providing services to the Central Government, State Government, Union territory or Local Authority or a Government Authority in relation to any function entrusted to a panchayat under article 243G of the Constitution or in relation any function entrusted to a Municipality under article 243 W of the Constitute are exempted from payment of GST subject to the fulfilment of the conditions. 13. The applicant further raised the question that in such specified cases (in para 12 supra), the supply made by the Radio/TV/outdoor/Internet/Telecom/any other advertiser to the advertising agency is also exempt from GST in terms of Notification No. 12/2017-Central Tax(Rate) dated 28-06-2017(as amended from time to time). 13.1 On perusal of said notification, we find that such exemption is also extended to Radio/TV/outdoor/Internet/Telec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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