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Dear Professional Colleague,

No Service tax is leviable on the amount of discounts/ incentives as these are not consideration for any service rendered

We are sharing with you an important judgment of the Hon’ble Mumbai CESTAT, in the case of Group M Media India Pvt. Ltd and Others Vs. Commissioner of Central Excise/ Service Tax Thane-I/ Mumbai-II and Others [2014 (11) TMI 545-CESTAT MUMBAI] on following issue:


Whether Service tax is leviable on the amount of discounts/ incentives received by the service provider in respect of provisioning of services?

Facts & background:

In the instant case, there are eight appeals and three cross-objections filed on the following common issues:

· Whether Service tax levy is sustainable in respect of discounts/incentives received by the Advertising agency from the print/ broadcast media in respect of advertisements placed by the said agencies on behalf of customers;

· Whether Service tax is leviable on amounts, which are outstanding and the Advertising agencies write back these amounts after a lapse of time as per the accounting procedure.


The Hon’ble CESTAT, Mumbai, relying upon the decision in the case of Gray World Wide India Pvt. Ltd. vides final order No. A/1337-1338/14/CSTB/CI dated July 30, 2014, held that Service tax is not leviable on these amounts in as much as these are either incentives or accounting adjustments and not consideration for any services rendered.

Accordingly, the Appeals filed by the Revenue were rejected while the appeals filed by the Assesses were allowed.

Hope the information will assist you in your Professional endeavors. In case of any query/ information, please do not hesitate to write back to us.

Thanks & Best Regards.

Bimal Jain

FCA, FCS, LLB, B.Com (Hons)

Flat No. 34B, Ground Floor, Pocket - 1,

Mayur Vihar, Phase - I,

Delhi – 110091, India



Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the authors nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon.

Readers are advised to consult the professional for understanding applicability of this newsletter in the respective scenarios. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. No part of this document should be distributed or copied (except for personal, non-commercial use) without our written permission.

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Bimal Jain
Category Service Tax   Report

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