2019 (8) TMI 1640 - AT - Service Tax

Classification of services - business support service or sale of space for advertisement services - providing of space on rent to the service provider for beauty parlour - appellant club has provided any business support services to the beauty parlour service provider or not - HELD THAT - The issue is no more res integra in the light of the judgment of the Tribunal in the case of Royal Western India Turf Club Ltd. v. Commr. of S.T. Mumbai 2012 (11) TMI 526 - CESTAT MUMBAI where it was held that mere renting of office space does not come within the definition. Such providing of space should be along with other facilities specified therein. It is not the case of the department such facilities have been provided to the book makers or the caterer. Demand of tax under sale of space or time for advertisement services - appellants have contended that consideration received cannot be connoted with sale of space or time for advertisement as that is not the service provided by the appellant at all - HELD THAT - The amount is not taxable in the hands of the appellant under the alleged category of service. The impugned orders are set aside to the extent of confirmation of demand of service tax on business support services and sale of space for advertisement services and the appeal filed by the appellant is allowed with consequential benefit including refund of tax interest and penalty already paid by the appellant on this count under protest - Appeal allowed in part.

Summary

Issues:
- Whether the appellant provided business support services to the beauty parlour service provider?
- Whether the amounts received during the new-year eve can be classified as sale of space for advertisement services?

Analysis:

Issue 1: Business Support Services
The appellant contended that the demand for Business Support Services was unjustified as they only provided space on rent to the beauty parlour service provider and did not offer any business support services. The Tribunal referred to the judgment in the case of Royal Western India Turf Club Ltd. v. Commr. of S.T., Mumbai, which clarified that renting of office space alone does not constitute business support services. The definition of business support services includes providing office space along with other specified facilities. Since the department did not prove that such facilities were provided, the demand for business support services was deemed invalid. Consequently, the Tribunal set aside the demand for business support services.

Issue 2: Sale of Space for Advertisement Services
Regarding the demand under sale of space for advertisement services, the appellant argued that they did not provide space for advertisement from third parties but received sponsorship from corporate entities to display their products within the club. The Tribunal analyzed the definition of sale of space or time for advertisement services, which includes providing space for showcasing products or services. The Tribunal concluded that the consideration received by the appellant was not for the sale of space or time for advertisement, as the service provided did not align with the taxable category. Therefore, the demand for tax under sale of space for advertisement services was also set aside by the Tribunal.

In conclusion, the Tribunal allowed the appeal filed by the appellant, overturning the demands for business support services and sale of space for advertisement services. The appellant was granted consequential benefits, including the refund of tax, interest, and penalty paid under protest.