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Issues involved: Appeal against Service Tax demand for "Sale of Space or Time for Advertisement" service u/s 65 (105) (zzzm) of the Finance Act, 1994.
Summary: The Municipal Corporation, Ludhiana appealed against an adjudication order confirming a Service Tax demand of Rs. 1,71,46,656/- along with interest under Section 75 and penalties under Sections 76, 77, and 78 of the Finance Act, 1994 for providing the taxable service of "Sale of Space for Advertisement." The petitioner received Rs. 14,70,21,870/- as consideration for providing space for advertisement, claiming it was under statutory provisions of the Punjab Municipal Act, 1976, towards advertisement tax and hence exempt from Service Tax. Upon examining the Punjab Municipal Act, 1976, it was found that the consideration received for the taxable service, even if collected as tax under the Act, is not immune to Service Tax. The provisions of the Finance Act, 1994 do not require reading down due to Service Tax being levied by a local authority under a State legislation. The amount collected by the Municipal Corporation is to be deposited in the Corporation Fund and does not constitute revenue of the State. It was held that there was no escape from the assessed liability, and the adjudication order was found to be without infirmity. The issue of whether penalties should have been imposed was left for further consideration. The petitioner was granted a waiver of pre-deposit and a stay on further proceedings, on the condition of remitting the assessed amount within a specified time frame. Failure to comply would result in the waiver being rescinded, and the appeal dismissed. The petitioner's counsel acknowledged the order, and the application was disposed of accordingly.
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