Court : Tribunal

Brief : : A case of missed opportunities for Revenue, says Tribunal while setting aside Service tax demand of Rs.60 lakhs - Appellant is not an advertising agency but only receives commission on sales - Tribunal.

Citation : M/s H K Associates Vs CCE, Chandigarh (Dated: December 31, 2008)

Judgment :

M/s H K Associates Vs CCE, Chandigarh (Dated: December 31, 2008)

A case of missed opportunities for Revenue, says Tribunal while setting aside Service tax demand of Rs.60 lakhs - Appellant is not an advertising agency but only receives commission on sales - Tribunal.

++ Submission that the payment of commission at the rate of 2%/3% for the purpose of a simple assignment of collecting the cheques is very much the higher side cannot lead to a conclusion that the payment is for a different purposes. To make such an allegation or to come to such a conclusion, investigation should have been conducted. None of the dealers have been contacted by the investigating officers to find out whether the services as envisaged in the agreement were rendered by M/s. H.K. Associates or not and also whether any other services were rendered by them. This appears to be a case of missed opportunities.

++ The issue to be decided is whether M/s. H.K. Associates have rendered the services of advertising agency to KBPL. It is not disputed that actual work of painting on the walls/advertisements were undertaken by various parties to whom M/s. H.K. Associates have paid the amount as mentioned earlier. No evidence have been relied upon to hold that M/s. H.K. Associates have conceived, designed, prepared the advertisements in question.

++ The amounts paid to M/s. H.K. Associates have been accounted under the category of advertisement and sales promotion expenses by KBPL. A portion of the sum so received was spent on advertisement by H.K. Associates. These facts alone can not lead to an inference that M/s. H.K. Associates have rendered the services as advertising agency and the entire amount of about Rs.9 crores received from KBPL has to be treated as representing payment for rendering advertising services.

++ Whether commission of sales could be treated as advertisement and sales promotion expenses is a debatable point. However, this is not an issue to be decided by us. It suffices to say that the terms of the agreement produced and the entries in the balance sheets of manufacturing company and those of M/s. H.K. Associates support the claim by the learned advocate for the parties. The balance sheet of M/s. H.K. Associates also mentions these amounts only as commission on sales.

Appeal of M/s H.K.Associates allowed with consequential relief. As for the Revenue appeals seeking enhancement/imposition of penalties, there was no question of looking into the same as the alleged service tax demand itself was set aside. Consequently, Revenue appeals were rejected.: DELHI CESTAT ;