2018 (7) TMI 1442 - AT - Service Tax

Advertisement services - sale of space for hoarding in public places - Revenue was of the view that service tax is liable to be paid by the appellant on the amount so received under the category of sale of space or time for advertisement services , which was included in the statute book w.e.f. 01.05.2006 - Held that - During the period on or after 01.05.2006, the appellant did not receive any consideration even though the service was to be provided for the period when the levy was in existence. Section 67 of the Finance Act, 1994 (as it stood) at the relevant time that service provided or to be provided is taxable from the time the value of the consideration for the same is received - In the present case the consideration has been received on 21.04.2006 when there was no levy in existence and since no consideration has been received after 01.05.2006 - the levy of service tax cannot be sustained. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Restoration of appeal and decision on merit.

Analysis:
The judgment deals with a miscellaneous application for restoration of appeal against a Final Order. The appeal was initially rejected along with CoD and stay applications. The High Court directed the Tribunal to restore the appeal and decide it on merit. The appeal was restored with the agreement of both parties and heard for a decision on merit.

The dispute arose when the Municipal Corporation of a city floated a tender for the sale of space for hoarding in public places. The auction for the tender was conducted before the levy of service tax came into effect. The Revenue contended that service tax was payable on the amount received by the Corporation for the hoarding space. The Corporation argued that as the consideration was received before the levy came into existence, no service tax was payable.

The Revenue argued that since the service was provided during the period when the levy was in effect, the Corporation was liable to pay service tax. Additionally, the Revenue opposed the Corporation's attempt to shift the tax liability to their licensee through a contract, which was deemed impermissible under the Finance Act, 1994.

After considering the arguments from both sides and reviewing the facts, the Tribunal noted that the consideration for the service was received before the levy of service tax came into effect. As per Section 67 of the Finance Act, 1994, the service is taxable from the time the consideration is received. Since no consideration was received after the levy came into effect, the Tribunal held that the levy of service tax could not be sustained. Consequently, the impugned order was set aside, and the appeal was allowed.

This judgment clarifies the application of service tax in cases where consideration is received before the levy comes into effect. It emphasizes the importance of the timing of consideration in determining the tax liability and upholds the principle that service tax is applicable when the consideration for the service is received, as per the relevant provisions of the Finance Act, 1994.