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Service Tax on Advertising Agencies, Service Tax Circular No 64/2003 CX(ST), 28-10-2003

Date: 28-10-2003
Notification No: Service Tax Circular No 64/2003 CX(ST)
Issuing Authority: Service Tax  
Type: Circular
File No: 168/01/2003-CX.4
Subject: Service Tax on Advertising Agencies

The representations have been received in this officer with regard to the leviability of Service Tax under the category of Advertising Agency Services in respect of Persons agencies engaged in canvassing for advertisements for which they get commission from the publishers. The persons involved do not provide any service like making, preparing, displaying and exhibiting and only undertaking canvassing for the advertising.

2. The term canvassing may merely involve contacting potential advertisers and persuading them to give advertisement to a particular newspaper/periodical/magazine. The making and preparation of the advertisement namely, drafting of the text, preparation of layout is left either to the advertiser or to newspaper/periodical/magazine. Such a service is known as ‘space selling’. In such cases, since the agency undertaking the job of merely brining the order for an advertisement and does not undertake any further activity. It would not fall within the definition of advertising agency and will not be subjected to service tax.

3. On the other hand, ‘canvassing’ may involve such agency approaching a customer, receiving the texts of the advertisement (including photographs, monograms etc. of the customs), estimating the space that such advertisement would occupy in the newspaper/periodical/magazine, negotiating the price, informing the general layout of the advertisement that would finally appear in such newspaper etc. In such cases the term ‘canvassing’ would certainly fall within the phrase ‘any service provided ----------in any manner connected to making, preparing, displaying and exhibiting’ and would be taxable service.’

4. In view of above, I have been directed to say that if the canvassing is limited to space selling then such services would not be liable to any service tax. However, if canvassing is involving receiving the text of advertisement, estimating the space that such advertisement would occupy in the newspaper/periodical/magazine, negotiating the price, forming the general layout of the advertisement that would finally appear in the newspaper then such activity would be liable to service tax under the category of Advertising Agency Service.

5. The field formations may suitable be informed.

6. Trade Notice may be issued for the information of the trade.

7. The receipt of this Circular may kindly be acknowledged.

(Sanjiv Srivastava)
Deputy Secretary to the Government of India

[F. No. 168/01/2003-CX.4]


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