Service tax is payable only on advertisements on radio or TV, vide Clause (g) of Negative list of Services u/s 66D of finance act 2012.
Section 65B Defines "Advertisement" as 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.
Resultantly finance act 2012, sale of space in print media, bill boards, public places, buildings, conveyances, cell phones, ATM, internet is not taxable. Aerial advertisement is also not taxable. Only advertisement radio and TV and sale of time slots by broadcasting organisation are taxable.
The exemption is available only to advertisement and to other services like designs, advertisements agents, etc. Services provided by advertisement agencies relating to making or preparation of advertisement & commissions received by advertisement agencies from broadcasting & publishing companies would thus be taxable. Moreover, canvassing advertisement for publishing on a commission basis is taxable. Service tax is payable only on commission and not on advertisement charges payable by the advertisement agency to the newspaper, TV or Radio broadcaster, etc. Further, cash discount received from the media is not a service and hence not taxable as held by CESTAT.
Tax-ability of composite services of providing space for advertisement with taxable service relating to design & preparation of the advertisement will be determined as per the provisions for 'bundled services' stipulated under the Act.