2012 (12) TMI 674 - AT - Service Tax

Sale of advertising space or time service - applicant is a Municipal corporation - seeking waiver of pre-deposit of demand of service tax and interest - Held that - As per the provisions of Section 65(105) taxable service means any service provided to any person by any other person in relation to sale of space or time for advertisement in any manner, but does not include sale of space for advertisement in print media and sale of time slot by a broadcasting agency or organization . In the present case, where the applicants are collecting taxes or license fee in respect of the permission granted for putting up advertisement boards on the private properties, the applicants have prima facie a strong case. In respect of advertising boards which were on the street light poles and in respect of the rent which is given to the advertising agency to set up advertising board, the applicants have not made out a case for total waiver of service tax. As the adjudicating authority by invoking the provision of Section 80 have waived the penalty, therefore, taking the demand in respect of the land which is given for setting up structures for advertising and in respect of advertisement on the street light on the poles for the normal period, the applicants are directed to deposit Rs.8.00 lakhs (Rupees Eight lakhs only) within eight weeks.

Summary

Issues involved:
Waiver of pre-deposit of service tax demand for providing advertising space, applicability of service tax on charges collected for various services provided by Municipal Corporation.

Analysis:
The applicant, a Municipal Corporation, filed for waiver of pre-deposit of service tax demand amounting to Rs. 1,17,95,397/- along with interest. The demand was confirmed on the basis that the applicant provided services under the category of Sale of advertising space or time service. The contention raised was that a significant portion of the demand was related to collection of statutory taxes, levies, and charges, which were not directly linked to providing space for advertising. Additionally, charges collected for renting space for erecting structures to advertising agencies were argued to be outside the scope of service tax as the applicant was merely facilitating the rental process, not directly providing advertising space.

Regarding charges collected for providing space for displaying advertisements on street light poles owned by the Corporation, it was argued that this activity was incidental to the Corporation's statutory function of providing street lights and not a deliberate commercial activity subject to service tax. The applicant also highlighted that the adjudicating authority did not impose penalties under specific sections of the Finance Act, 1994, considering reasonable causes such as frequent employee transfers. The applicant contended that the allegation of suppression of facts for tax evasion was not sustainable due to the benefit of Section 80 of the Finance Act, 1994 being allowed by the adjudicating authority.

The Revenue's argument was based on the lower authority's findings, emphasizing that the charges collected by the applicant for allowing advertising space, even on rented properties, made them liable to pay service tax. The Revenue maintained that the space provided for erecting structures was specifically intended for advertising purposes, justifying the applicability of service tax. Similarly, in the case of space provided on street light poles, it was argued that since the Corporation collected charges for placing billboards on its poles, the applicant was indeed providing advertising space subject to service tax.

The judgment analyzed the provisions of the Finance Act, 1994, defining taxable services related to the sale of space or time for advertisement. It was noted that while the applicant had a strong case for certain charges related to permission granted for advertising boards on private properties, there was no justification for a complete waiver of service tax for all services provided. Consequently, the Tribunal directed the applicant to deposit a specified amount within a given period, with the balance of service tax and interest being waived pending the appeal process.