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2017 (7) TMI 600 - AT - Service Tax


Issues involved:
Demand of service tax liability on the appellant for the "sale of space for advertisement service."

Analysis:

Issue 1: Service Tax Liability on Sale of Space for Advertisement Service
The appeal revolved around the demand for service tax liability on the appellant for alleged services related to the sale of space for advertisement service. The original authority confirmed a tax liability of ?3,01,575 along with interest and penalties under the Finance Act, 1994. The Commissioner(Appeals) set aside the penalties but upheld the tax liabilities. The appellant argued that they were only collecting advertisement tax as per statutory powers and should not be liable for service tax. The appellant relied on the judgment in Selvel Media Services Private Ltd. Vs. Municipal Corporation of City of Ahmedabad. On the contrary, the Department contended that the activity involved was renting space and time for advertising, justifying the tax liability.

Issue 2: Tax on Tax Principle
The Tribunal examined the principle that there should not be any tax on tax. They considered the Gazette Notification by the Municipal Corporation of Rajahmundry, the Greater Hyderabad Municipal Corporation Act, and the Andhra Pradesh Municipalities Act. The Tribunal noted that the appellant's activity of collecting advertisement tax should not be subjected to service tax. They referred to a Board's circular and the judgment in Selvel Media Services Private Ltd. case, emphasizing that income derived from tax on advertising activity should not attract service tax. The Tribunal highlighted that the lower authorities erred in concluding that the appellant's activity fell under the category of sale of space or time for advertisement.

Conclusion:
The Tribunal found that the Department sought to levy service tax on amounts collected as advertisement tax by the appellant, which was not equivalent to selling space or time for advertisement. Consequently, the Tribunal ruled in favor of the appellant, setting aside the demand for tax liability. The appeal was allowed with any consequential benefits.

 

 

 

 

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