Advertisement space and notional income disputes fail where taxability and extended limitation are unsupported by evidence of suppression.

Mere display of advertisements on buses operated by a State Transport Corporation does not, by itself, amount to the taxable service of sale of space or time for advertisement, so the related demand was unsustainable. Service tax on renting of immovable property could not be confirmed on the basis of unrealized or notional income reflected in financial records, because liability must rest on actual taxable receipt rather than accounting differences, so that demand also failed. The extended period of limitation could not be invoked without material showing suppression or intent to evade tax; audit detection alone was insufficient on these facts, so the time-bar objection was rejected in favour of the assessee.

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Issues: (i) Whether display of advertisements on buses owned and operated by the State Transport Corporation amounted to the taxable service of sale of space or time for advertisement; (ii) whether the demand under renting of immovable property service could be sustained on the basis of differences reflected in financial records as unrealized or notional income; and (iii) whether the extended period of limitation could be invoked in the absence of material showing suppression or intent to evade tax.

Issue (i): Whether display of advertisements on buses owned and operated by the State Transport Corporation amounted to the taxable service of sale of space or time for advertisement.

Analysis: The activity in question was the display of advertisements on buses operated by a State Transport Corporation, not rendering of advertising agency service. The Tribunal treated the issue as settled by precedent and held that mere display of advertisements on the assessee's vehicles does not convert the assessee into an advertising agency or bring the receipts within the taxable category of sale of space or time for advertisement.

Conclusion: The demand under this head was not sustainable and was decided in favour of the assessee.

Issue (ii): Whether the demand under renting of immovable property service could be sustained on the basis of differences reflected in financial records as unrealized or notional income.

Analysis: The demand was founded on a reconciliation between service tax returns and income-tax / balance-sheet figures, rather than on evidence of actual taxable receipt. The Tribunal held that tax cannot be confirmed on unrealized or notional income merely because amounts appear in financial statements or ledger records, and therefore the basis of the demand was legally infirm.

Conclusion: The demand under this head was not sustainable and was decided in favour of the assessee.

Issue (iii): Whether the extended period of limitation could be invoked in the absence of material showing suppression or intent to evade tax.

Analysis: The only basis suggested for limitation was discovery during audit, without independent evidence of wilful suppression. The Tribunal held that audit detection by itself does not establish suppression or intent to evade, and statutory bodies were also treated as not being shown to have such intent on the facts of the case.

Conclusion: Invocation of the extended period was not justified and was decided in favour of the assessee.

Final Conclusion: The impugned demand on both counts was held unsustainable, the adjudication order was set aside, and the appeal succeeded.

Ratio Decidendi: Mere display of advertisements on buses by a transport undertaking does not, by itself, constitute the taxable service of sale of space or time for advertisement, and service tax cannot be confirmed on notional receipts or by invoking the extended period without material showing suppression and intent to evade tax.

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