Query urgent

BASAK (NA) (45 Points)

08 March 2019  

Hello Sir,

My client has been served a notice reg service tax, where he (advertising agency) charged gross value of advt. in print media (news paper) to his client charging service tax only on his commission/discount part and not on the gross value of the bill and the client paid the same by deducting TDS. And the agency was billed by the print media (news paper) for the same excluding his commission/discount. It can be detailed as:

Print Media to Agency (Disc. @ 15%)

Cost of Advt.                              100.00

Less:Comm/Disc. @ 15%           15.00

Bill Amount (100-15)                   85.00

Paid by agency to Print Media    85.00

Agency to Client

Cost of Advt.                                                      100.00

Add: Service Tax @ 15% on Comm 15.00             2.25

Bill Amount (100+2.25)                                       102.25

Paid by client to agency by deducting TDS        (102.25-TDS)

Now, there is a mismatch between ST return (as G.T. 15.00, Service Tax 2.25) and 26AS (G.T. 100.00). Also noted, ITR had been filed as G.T. as 100.00. So now, the Service Tax authority demanding Service Tax on Rs. 100.00. Can you please help me in this regard?

Thanks in advance.