Municipal advertisement tax is not consideration for advertisement services, so service tax cannot be levied on it.

Amounts collected by a municipality as statutory advertisement tax were held not to be consideration for the sale of space or time for advertisement. The activity was characterised as collection under municipal taxing powers, not a taxable service, and the Board's circular against levying tax on tax supported that view. The cited precedent likewise treated such municipal levies as outside the service tax net. Accordingly, the service tax demand on the advertisement tax collections was unsustainable and was set aside.

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Issues: Whether amounts collected by a municipality as advertisement tax could be subjected to service tax as consideration for sale of space or time for advertisement.

Analysis: The activity was found to be collection of advertisement tax under municipal taxing powers and not a taxable service of selling space or time for advertisement. The collection was traceable to the municipal taxing provisions and the Board's circular clarified that tax on tax should not be levied. The cited precedent also supported the view that municipal levies of this nature do not constitute taxable consideration for advertisement services.

Conclusion: The demand of service tax on the amounts collected as advertisement tax was unsustainable and was set aside.

Final Conclusion: The appeal succeeded and the service tax demand could not be sustained against the municipality.

Ratio Decidendi: Amounts collected by a local authority as statutory advertisement tax do not constitute consideration for sale of space or time for advertisement and cannot be subjected to service tax as tax on tax.

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