Admin[By Shaleen Shah (Partner), VNCA]
Selling of space or time slots for advertisements other than advertisements broadcast by radio or television is not taxable service vide Clause (g) of Negative List of Services u/s 66D w.e.f. 1-Jul-2012. In other words, service tax is payable only on advertisements on radio or TV.
Section 65B defines "advertisement" as any form of presentation for promotion of, or bringing awareness about, any event, idea, immovable property, person, service, goods or actionable claim through newspaper, television, radio or any other means but does not include any presentation made in person.
Resultantly w.e.f. 1-Jul-2012, sale of space in print media, bill boards, public places, buildings, conveyances, cell phones, ATM, internet is not taxable. Aerial advertisement is also not taxable. Only advertisements on radio and TV and sale of time slots by broadcasting organisation is taxable.
The exemption is available only to advertisements and not to other services like designs, advertisements agents. etc. Services provided by advertisement agencies relating to making or preparation of advertisements & commissions received by advertisement agencies from broadcasting & publishing companies would thus be taxable. Moreover, canvassing advertisement for publishing on a commission basis is taxable. Services tax is payable only on commission and not on advertisement charges payable by the advertisement agency to the newspaper, TV or Radio broadcaster, etc. Further, cash discount received from the media is not a service and hence not taxable as held by CESTAT.
Taxability of composite services of providing space for advertisement with taxable service relating to design & preparation of the advertisement will be determined as per the provisions for `bundled services’ stipulated under the Act.
