Service Tax Demand on Advertisement Services & Renting Reduced, Penalties Waived for Statutory Bodies

The Tribunal set aside the demand of Service Tax on the services of "sale of space or time for advertisement," ruling that such activities, discharged under statutory duties, are not taxable. The demand under the category of "renting of immovable property service" was reduced upon request for re-quantification, with penalties being set aside for the appellants, statutory bodies, due to a bona fide belief in non-applicability of Service Tax. The judgment was based on legal precedents and considerations of the nature of services provided, ultimately resolving the tax liability issues in favor of the appellants.

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Issues:
1. Tax liability on the services of "sale of space or time for advertisement."
2. Demand of Service Tax under the category of "renting of immovable property service" and imposition of penalty.

Analysis:
1. The judgment addresses the issue of tax liability on the services of "sale of space or time for advertisement." The Tribunal observed that the tax liability was confirmed against the assessee, but it was settled through various Tribunal decisions that such activities, discharged under statutory duties, are not taxable. Citing precedents like M/s.Pimpry Chinchwad Municipal Corporation v. CCE, Pune, the Tribunal held that charging fees for such services did not amount to any taxable service. Consequently, the demand of Service Tax on this count was deemed unsustainable, and the same was set aside along with interest and penalty.

2. The judgment also delves into the demand of Service Tax under the category of "renting of immovable property service" and the imposition of penalty. The appellants had not contested the demand before the Commissioner(Appeals) but requested a re-quantification by extending the small scale exemption limit Notification. The plea was accepted, reducing the demand to &8377;50,121/- with an identical penalty. The appellants challenged the imposition of penalties, arguing that being statutory bodies, they lacked mala fide intention to invoke penal provisions. Referring to the case of Nagpur Municipal Corporation v. Commissioner of Customs & Central Excise, the Tribunal noted that penalties are not imposable on statutory bodies with a bona fide belief of non-applicability of Service Tax. Following this reasoning, the penalty was set aside while confirming the demand of Service Tax under the category of "renting of immovable property."

In conclusion, the judgment resolved the issues by setting aside the demand of Service Tax on the services of "sale of space or time for advertisement" and the penalty associated with the demand under the category of "renting of immovable property service." The decision was based on legal precedents and considerations of the nature of the services provided by the appellants as statutory bodies.

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