Analysis of Entry Entry (g): Selling of space for advertisements in print media in negative list :
The service tax levy extends to advertisement in all media except print media. In other words, the levy extends to other segments like online and mobile advertising, advertisements on internet websites, out-of-home media, on film screen in theatres, bill boards, conveyances, buildings, cell phones, automated teller machines, commercial publications, aerial advertising*, etc.
“Print media” means,—
(i) “book” as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867, but does not include business director ies, yellow pages and trade catalogues which are primarily meant for commercial purposes;
(ii) “newspaper” as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867 [Section 65B(39a)].
Thus, sale of space for advertisements in business directories, yellow pages and trade catalogues would attract service tax.
*Aerial advertising is a form of advertising that incorporates the use of aircraft, balloons or airships to create, transport, or display, advertising media. The media can be static, such as a banner, logo, lighted sign or sponsorship branding. It can also be dynamic, such as animated, lighted or audio.
Advertisement means 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 [Section 65B(2)].
Points to be noted
- Making or preparing advertisements: Services provided by advertisement agencies relating to making or preparation of advertisements would not be
covered in this entry and thus, would be taxable. This would also not cover commissions received by advertisement agencies from the broadcasting or publishing companies for facilitating business, which may also include some portion for the preparation of advertisement.
- Composite service of providing space for advertisement coupled with designing and preparation of the advertisement: In case a person provides a
composite service of providing space for advertisement that is covered in the negative list entry coupled with taxable service relating to design and preparation of the advertisement, this would be a case of bundled services taxability of which has to be determined in terms of the principles laid down in section 66F of the Act.
As per section 66F, if such services are bundled in the ordinary course of business then the bundle of services will be treated as consisting entirely of such service which determines the dominant nature of such a bundle.
If such services are not bundled in the ordinary course of business then the bundle of services will be treated as consisting entirely of such service which attracts the highest liability of service tax.
- Canvassing advertisement for publishing on a commission basis: Merely canvassing advertisement for publishing on a commission basis by
persons/agencies is not covered in the negative list entry and is taxable.