VKJ Latest News Update

VKJ Law Offices of Vinay K. Jain Advocates & Solicitors

ST – Sale of space or time for advertisement service – Consideration received in advance on 21.04.2006 when no levy was in existence – demand of tax cannot be sustained: CESTAT

2019-TIOL-2545-CESTAT-DEL

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST BLOCK NO 2, R K PURAM, PRINCIPAL BENCH
NEW DELHI-110066

ST RoA No. 50463/2018 with ST Appeal No. 345 of 2012

Arising out of Order-in-Appeal No. 06(DK)ST/JPR-I/2009, Dated: 4.2.2009
Passed by the Commissioner (Appeals), Central Excise, Jaipur

Date of Hearing: 22.06.2018
Date of Decision: 22.06.2018

JAIPUR NAGAR NIGAM

Vs

COMMISSIONER OF CENTRAL EXCISE
JAIPUR

Appellant Rep by: Shri Naresh Gupta, Shri Mihit Katta and Shri Tushar Jalan, Advs.
Respondent Rep by: 
Shri G R Singh, AR

CORAM: V Padmanabhan, Member (T)
Rachna Gupta, Member (J)

ST – The assessee which is the Municipal Corporation for the city of Jaipur, floated a tender for sale of space for hoarding in public places – The tender was for the period 01.06.2006 till 31.03.2007 – The auction was conducted on 21.04.2006 and the entire consideration for the said period was received by assessee in advance – Revenue was of the view that service tax is liable to be paid by assessee 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 – The auction carried out by assessee for licensing of hoarding was on 21.04.2006 and at the time the entire consideration for the period of contract i.e. 01.06.2006 to 31.03.2007 was received by assessee – During the period on or after 01.05.2006, assessee did not receive any consideration even though the service was to be provided for the period when the levy was in existence – 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: CESTAT

Appeal allowed

FINAL ORDER NO. 52352/2018

Per: V Padmanabhan:

The present miscellaneous application for restoration of appeal has been filed against the Final Order dated 02.01.2013 in which the appeal filed by the appellant was rejected alongwith CoD and stay applications. This Final Order was challenged before the Hon’ble Rajasthan High Court at Jaipur and the Hon’ble High Court vide its order dated 11.10.2017 has directed the Tribunal to restore the appeal and decide the same on merit. In view of above, appeal is restored to its original number and with the concurrence of both sides the appeal is heard for decision on merit.

2. With the above background, we heard Sh. Naresh Gupta, ld. Advocate for the appellant and Sh. G. R. Singh, ld. AR for the Revenue.

3. The brief facts leading to the present dispute is that the appellant, which is the Municipal Corporation for the city of Jaipur, floated a tender for sale of space for hoarding in public places. The tender was for the period 01.06.2006 till 31.03.2007. The auction was conducted on 21.04.2006 and the entire consideration for the said period was received by the appellant in advance. 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” defined under Section 65 (105) (zzzm) of the Finance Act, 1994 which was included in the statute book w.e.f. 01.05.2006. Accordingly, show cause notice was issued and both the adjudicating authority as well as the Commissioner (Appeals) in the impugned order, ordered payment of Service Tax amounting to Rs.34,61,656/-. The order further ordered payment of interest and penalties under various Sections of the Finance Act, 1994. Challenging the said order, the ld. Advocate submitted as follows:-

(i) He submitted that even though the tender was floated on 21.04.2006, when the entire consideration for the contract period was received, the auction was for the period was 01.06.2006 to 31.03.2007. He emphasised that levy come into existence only w.e.f. 01.05.2006 but prior to that date the amount was received. After 01.05.2006 the appellant has not received any consideration and hence, no service tax is liable to be paid by them;

(ii) He also submitted that the appellant has auctioned the space in its capacity as a local self government for the city of Jaipur in terms of Article 289(1) of the Constitution of India, the consideration received is accounted as State Income and hence the same is immune for taxation by the Central Government.

4. Ld. AR appearing for the Revenue justified the impugned order and his submissions are as under:-

(i) The period for which the service was provided was 01.06.2006 to 31.03.2007 during which period the leviability of Service tax was very much in existence. Since the amount recovered by the appellant was for providing the service during the period when Service Tax was liable, the appellant was liable to pay Service Tax.

(ii) He also submitted that the appellant has sought to divert the liability of the Service Tax to their licensee through a contract which is not permissible as per the provisions of Section of the Finance Act, 1994. Finally, he submitted that Service Tax was leviable on the consideration for the period w.e.f. 01.06.2006.

5. After hearing both sides and on perusal of record, we note that the Revenue has proposed to levy of Service Tax under the category of sale of space. Such service was included in the statute book w.e.f. 01.05.2006. The auction carried out by the appellant for licensing of hoarding was on 21.04.2006 and at the time the entire consideration for the period of contract i.e. 01.06.2006 to 31.03.2007 was received by the appellant. In other words, 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.

6. 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, we are of the view that the levy of Service tax levy cannot be sustained.

7. In view of the above, impugned order is set aside and appeal is allowed.

(Dictated and pronounced in the open Court)

Leave a Reply

Close Menu
%d bloggers like this: