1. The applicant is engaged in the business of running advertising agency in Delhi and had collected publicity charges, against which the impugned order dated 31st March, 2006 has confirmed a demand of Rs. 40,12,721/- as Service Tax.
2. The learned Authorized Representative of the applicant muscles in with the Trade Notice issued by the Department as well as the clarification made by the learned Commissioner of Central Excise, Chennai, indicating that the applicant has not rendered taxable service to the original client and hence the demand raised against it, cannot be sustained. He, however, states that out of these transactions a sum of Rs. 26 lakhs has already been paid to the Exchequer by various advertisement agencies as confirmed by them. The definition of taxable service as per Section 65(105)(e) is as follows: Taxable Service means any service provided to a client by an advertising agency in relation to advertisement, in any manner.
While dealing with the question, whether the advertising agencies to whom services were rendered and from whom money was collected as publicity charges would merit to be called as clearance, the learned Commissioner has made the following observations in Para 6.3 of the impugned order: 6.3 As per the definition supra it is observed that the word 'client' has not been defined under the provisions of Act ibid.
However, a client, for the purpose of the 'Service Tax' taxation principles, can be considered to be a person who is receiving the taxable services, provided by the service provider against a consideration. Thus, the requisite stipulations of being a client are satisfied in the instant case as it is observed that the assessee in the normal course of rendering advertising services provided it to a 'client', who happens to be another advertising agency. However, it cannot be said that other advertising agency cannot be treated as a client just because he is another such agency. Incidentally, the other advertising agency in turn is providing advertising services to its own client. The categorization of client is a futile exercise as the definitions supra do not call for such interpretation. It is also not the case where the assessee is claiming that the clients, incidentally the other advertising agencies, who are availing such services, are not being charged for the same. Since an activity of a service is rendered for a consideration an activity concerning taxable event has taken place.
3. Having heard both sides and after examining the records, it appears that the applicant has not made out a case fit enough for waiver of Service tax demanded. Considering the facts and circumstances, we direct the applicant to deposit a sum of Rs. 12 lacs (rupees twelve lacs only) within six weeks from today, failing which the appeal shall stand dismissed. On depositing the said amount, the remaining amount of the tax demanded, shall stand waived till the matter is finally taken up for hearing.
4. To come up for reporting compliance and further orders on 31st October, 2006.