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Channels pull out Lever ads in service tax spat

Television Channels and India's biggest advertisers are at loggerheads over a 5 per cent service tax that has been made mandatory for advertisers.

The fight has taken a sharp turn with Star India and Sony Entertainment Television India, reacting strongly and pulling out all Hindustan Lever Limited advertisements with effect from September 1, 2002.

In a communication to the media agency of HLL, the broadcasters have said the service tax on broadcasting needs to be paid in addition to the existing rates and needs to be disclosed separately in the release orders, without which the advertisements will not be telecast.

When contacted, HLL said that it would along with the other members of the Indian Society of Advertisers follow the recommendations of the association on this issue.

Ranjit Salvi of Indian Society of Advertisers said, "We have recommended to our members that all future contracts/deals on rates with broadcasters should be inclusive of service tax. It is not mandatory for advertisers to bear the broadcasting service tax, which has been imposed on the broadcasters."

"However, in order to facilitate broadcasters to meet billing requirements, we have recommended to all members that it would be in order for members to accept bills from broadcasters, which indicate service tax separately, as long as the total rate charged is not higher than the contracted rate," he added.

It is given to understand from ISA that companies like Hindustan Lever, Britannia, Coca Cola, ICICI, the Godrej group, Raymond, the Tata Group, Hero Honda are among the few who are not reimbursing any additional broadcasting service tax.

The broadcasters are not willing to accept this. According to a senior official of Indian Broadcasting Federation, "The service tax has to be shown separately and the channels should not be singled out."

While Star India refused to comment on the issue, Sony officials said that they are negotiating with HLL on this issue.

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