2018 (9) TMI 1208 - AT - Service Tax

Sale of space or time for Advertising services - Levy of Service Tax - display of advertisement - whether service tax is leviable on the amount collected by Nagar Nigam, Kanpur for allowing display of advertisement under the category of Sale of space or time for Advertising services ? Held that - The issue is no more res-integra and stands settled by Hon ble Gujarat High Court in the case of Selvel Media Services Pvt. Ltd. V/s Municipal Corporation of City of Ahmedabad 2010 (3) TMI 1011 - GUJARAT HIGH COURT and it was held that grant of permission is part and parcel of function of Municipal Corporation in the form of public duty to ensure better Municipal governance and cannot be termed as services rendered to advertising agent. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Whether service tax is leviable on the amount collected by Nagar Nigam, Ghaziabad for allowing display of advertisement under the category of 'Sale of space or time for Advertising Services'.

Analysis:
The judgment by the Appellate Tribunal CESTAT ALLAHABAD pertains to an appeal arising from an Order-in-Original issued by the Commissioner of Customs, Central Excise & Service Tax, Ghaziabad. The issue at hand revolves around the levy of service tax on the amount collected by Nagar Nigam, Ghaziabad for permitting the display of advertisements. The appellant received a show cause notice treating the collected amount as consideration for the sale of space or time for advertising services. Subsequently, the impugned Order-in-Original confirmed the demand and imposed a penalty. The Tribunal, after hearing both parties, noted that the issue had already been settled in previous cases. Specifically, final orders passed by the Tribunal in cases involving Agra Nagar Nigam and Commissioner of Central Excise, Kanpur, established that the amount collected by Municipal Corporations cannot be considered as consideration for providing advertising services. Citing a ruling by the Hon'ble Gujarat High Court in the case of Selvel Media Services Pvt. Ltd. v. Municipal Corporation of City of Ahmedabad, the Tribunal concluded that the grant of permission by Municipal Corporations is part of their public duty and not a service rendered to advertising agents. Therefore, the Tribunal held that the impugned order was not sustainable and allowed the appeal, entitling the appellant to consequential relief as per the law.

This judgment provides clarity on the taxation aspect concerning amounts collected by Nagar Nigam, Ghaziabad for advertisement displays. It underscores the distinction between public duties performed by Municipal Corporations and services provided for advertising purposes. The Tribunal's reliance on previous decisions and the ruling of the Gujarat High Court strengthens the legal reasoning behind the conclusion reached in this case. The judgment serves as a precedent for similar cases involving the taxation of amounts collected by public entities for allowing advertising displays, emphasizing the importance of understanding the nature of the transactions and the legal principles governing such matters.