2014 (3) TMI 301 - AT - Service Tax

Sale of Space or Time for Advertisement Service - Intention to evasion - Appellant entered into agreements with certain private agencies whereby the sold their exclusive rights over space belonging to them such as bus shelters, street lights, municipal property, etc., to the private agencies whereby the private agencies were entitled to allot the space for advertisement purposes on rental basis - Held that - Since the appellant herein is a Municipal Corporation and it is difficult to attribute intention to evade tax on the part of such bodies, we are of the prima facie view that the demand would survive for the normal period of limitation. In the present case, as per the statement furnished by the appellant the demand for normal period would be approximately Rs. 49 lakhs. No financial hardship has been pleaded by the appellant - Conditional stay granted.

Summary

Issues:
1. Whether the activity of selling exclusive rights over space for advertisement purposes by a Municipal Corporation falls under the category of 'Sale of Space or Time for Advertisement Service' for Service Tax liability.
2. Whether the delay in filing the appeal against the demand of Service Tax should be condoned.
3. Whether the Municipal Corporation is required to make a pre-deposit before appealing against the demand of Service Tax.

Analysis:
1. The case involved the Nagpur Municipal Corporation selling exclusive rights over space like bus shelters and street lights to private agencies for advertisement purposes. The Department claimed it fell under 'Sale of Space or Time for Advertisement Service' under Section 65(105)(zzzm) of the Finance Act, 1994, demanding Service Tax. The appellant argued they did not directly sell space but sold rights to third parties. The adjudicating authority confirmed the demand, imposing penalties. The Tribunal considered the definition of 'taxable service' and the scope of 'in relation to' as per legal precedents. It concluded that the activity of selling rights preceding the sale of space for advertisement falls within the service tax ambit. The Tribunal directed the appellant to make a pre-deposit of Rs. 49 lakhs.

2. The appellant sought condonation of the delay in filing the appeal due to coordination issues within the Municipal Corporation and seeking legal advice. The Tribunal accepted the reasons as satisfactory and allowed the condonation of delay application.

3. Regarding the pre-deposit, the appellant was directed to make a payment of Rs. 49 lakhs within eight weeks, with the balance of dues waived upon compliance. The recovery of the waived amount was stayed during the appeal's pendency. The Tribunal considered the financial aspect and the nature of the appellant being a Municipal Corporation in determining the pre-deposit amount and conditions for appeal proceedings.