2017 (7) TMI 685 - AT - Service Tax

Renting of immovable property - time limitation - Held that - there cannot be any dispute on taxability on this score when the said activity is not being shown to be covered by any exclusion or exemption from service tax thereof. We therefore hold that this activity will definitely be leviable to service tax but only for the normal period of limitation - However for the periods beyond the period of limitation in all these cases notwithstanding the protestations of the learned ARs to the contrary we are of the opinion that appellants being statutory bodies they cannot be held to have suppressed facts with any intent to evade payment of tax. - the demand of service tax amounts will sustain in respect of renting of immovable property in respect of all these appeals but only for the normal period of limitation along with interest liability thereof as applicable. Valuation - reimbursement of expenses - Sale of space or time for advertisement by municipalities / corporations - the appellants have contended that the activity sought to be taxed is only relating to collection of tax on advertisements and not on sale of space and time for advertisement per se - Held that - if the amounts received by the appellants are only towards advertisement tax collected by them under statutory powers bestowed on them that activity cannot be brought under ambit of service tax and the taxable value thereof cannot be taxed as sale of space and time for advertising service. This is a fundamental principal of taxation which has been reiterated by the CBEC in the Circular No.192/02/20016 wherein at Sl.No.3 the Board clarifies that taxes cesses or duties levied are not consideration for any particular service as such and hence not leviable to service tax - in the absence of any detailed facts and records before us this particular aspect will have to be checked up and confirmed only at the ground level. Accordingly for the limited purpose of establishing the nature and scope and the amounts received in these cases whether they pertain only to collection of tax on advertisements or whether they relate to or also include amounts received for sale of space for advertisement the matter is being remanded to the original authority for de novo consideration. Appeal allowed in part - part matter on remand.

Issues Involved:
1. Service tax on renting of immovable property.
2. Service tax on sale of space or time for advertisement.

Detailed Analysis:

1. Service Tax on Renting of Immovable Property:
The appellants conceded their liability for service tax on renting of immovable property for the normal period. The Tribunal noted, "there cannot be any dispute on taxability on this score when the said activity is not being shown to be covered by any exclusion or exemption from service tax thereof." Hence, the activity is liable to service tax for the normal period of limitation.

However, for periods beyond the normal limitation period, the Tribunal held that the appellants, being statutory bodies, could not be accused of suppressing facts with intent to evade tax. The Tribunal stated, "At the most, there would be some confusion or delay in understanding their liability to discharge service tax on that matter where a particular activity would be liable for service tax but certainly not accusations of suppression or wilful misstatement with intent to evade tax." This conclusion was supported by the decision in Birhanmumbai Municipal Corporation Vs. CST, Mumbai-I [2017-TIOL-1846-CESTAT-MUM].

Therefore, the Tribunal sustained the demand for service tax on renting of immovable property for the normal period along with applicable interest but set aside demands beyond the normal period of limitation. No penalties were imposed for demands within the normal period.

2. Service Tax on Sale of Space or Time for Advertisement:
The appellants contended that the amounts sought to be taxed were related to the collection of advertisement tax and not for the sale of space or time for advertisement. They referenced a Gazette Notification and relevant sections of the Greater Hyderabad Municipal Corporation Act, 1955, and the Andhra Pradesh Municipalities Act, 1965, to support their claim. They argued that "tax on tax may not be imposed as clarified in the Board’s circular No.192/02/2016-S.T. dt. 13/04/2016." The appellants also cited the judgment of the Hon’ble High Court of Gujarat in Selvel Media Services Private Ltd. Vs. Municipal Corporation of City of Ahmedabad [2016(45) STR 166 (Guj.)].

The Department contended that the income received was commercial consideration for the sale of space for advertisement, which falls within the ambit of service tax. The Tribunal noted confusion in the matter, pointing out that the show-cause notice and orders did not clearly establish whether the amounts were for advertisement tax or for the sale of space.

The Tribunal concluded that if the amounts received were solely for advertisement tax collected under statutory powers, they could not be taxed as service tax. This principle was reiterated in the CBEC Circular No.192/02/2016. However, if the amounts included consideration for the sale of space for advertisements, they would be liable for service tax.

Due to the lack of detailed facts, the Tribunal remanded the matter to the original authority for de novo consideration to establish the nature and scope of the amounts received. If the amounts were found to be solely for advertisement tax, there would be no service tax liability. If they included amounts for the sale of space, they would be taxable, but only for the normal period of limitation, with no penal liabilities.

Conclusion:
All appeals were disposed of with the directions provided, sustaining the service tax demand on renting of immovable property for the normal period and remanding the issue of service tax on the sale of space or time for advertisement for further verification.

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