HLL, the biggest advertiser in the country, has agreed to pay service tax to Star Plus, and HLL commercials will be aired on the channel effective Friday, 20th September. Said Raj Naik of Star TV, "Yes, the issue has been sorted out. We have renegotiated with HLL - in fact we did not have a deal with HLL, and so we have signed up a new deal, which includes the service tax." When asked if HLL was being offered a special rate by the channel in return of agreeing to pay service tax, Raj responded by saying, "It is between HLL and us. I don't want to talk about it and create an unnecessary controversy all over again."
As reported earlier, under a call from IBF, HLL ads along with many other clients who refused to pay service tax, were pulled off on September 1st, 2002. Later many channels including Sony resumed the telecast of Levers commercials as the Levers-Sony deal specifically included 'all levies and taxes'. However, Levers is believed to have provided a letter to Sony and have agreed to show service tax separately in the release instructions.
The service tax issue seems to be reaching an 'amiable conclusion'. However, one does wonder who would have suffered more if the problem had become more 'taxing'? Would ad revenues have suffered more or brand recall and sales?