Suggestions on draft circular on service tax - advertising - date extended
Board informs that last date for receiving feedback on the draft circular on advertising services has been extended up to 27/10/05. .Feedback may be sent preferably by email to sriramramamoorthi@yahoo.co.in. While we have already expressed our opinion in DDT 220 - 13 10 2005 - a concerned netizen wrote to us.
The Circular intends to include the cost of the media in the value of services rendered by the advertising company, but while reiterating in page 1 of the new Circular all earlier communications must be considered. Considering this, we refer to an earlier Circular no.78/08/2004-ST dt.23.03.04 which clarify that free commercial airtime when sold by Private Producers, will not be includable in the value of the services rendered by the Advertising Agency. Considering that the Board had decided its views, it is pertinent the 2004 March Circular on FCT should also be taken on record and emphasized that FCT when sold by Private Producers would also form part of the value of the service rendered by the Advertising Agency.
It is relevant that the entire gamut of advertising services need to be considered as one single service tax chain and it should be ensured that there is no breakage of the service tax chain. In other words, a manufacturer should not be put in a position that he will pay the tax on the Services availed but will not be entitled to credit as this runs counter to the Hon’ble Finance Minister’s speech in July 2004 wherein he has clearly mentioned intermingling of credits will allowed between goods and services.
It would also be pertinent that the Ministry of Finance and Central Board of Excise and Customs should also adequately use the services of organisations like Indian Society of Advertisers to develop a broad base invoice format wherein the cost of the media purchased downstream would get reflected in the ultimate cost of the advertising cost charged to the manufacturer. The Final Circular should illustrate all cases including FCT and explain that there will be no problem in availing Cenvat credit.
This netizen raises a serious problem about taking credit. Will the Board listen?