Statutory corporation wins appeal against service tax demands for bus acquisition and advertisement services
The CESTAT Kolkata allowed the appeal of a statutory corporation against service tax demands. The tribunal held that demands under Business Support Service and Time Space for Advertisement Services were not sustainable - the corporation's bus acquisition activities did not constitute business support services, and advertisement service demands were barred by limitation. For Renting of Immovable Property Service, liability was confirmed but restricted to normal limitation period only. The tribunal found no wilful suppression of facts as the department was aware of appellant's activities through regular returns filing, making extended period invocation invalid. All penalties were set aside due to absence of wilful suppression evidence.
Issues Involved: Limitation, Business Support Service, Renting of Immovable Property Service, Time & Space for Advertisement Services, Penalty.
Limitation: The appellant contended that the entire demand confirmed in the impugned order is barred by limitation. The Show Cause Notice was issued beyond one year from the due date of filing Half Yearly Returns. The department was well aware of the appellant's activities and had already raised demands under the category of 'Business Auxiliary Service'. The Tribunal observed that the department cannot claim wilful suppression of facts to evade service tax and invoke the extended period. Accordingly, the impugned order is not sustainable on the grounds of limitation.
Business Support Service: The demand of service tax of Rs.6,24,01,668/- was confirmed under 'Business Support Service'. The adjudicating authority held that the appellant provided infrastructural support services to private bus owners. However, the Tribunal observed that the appellant, being a statutory corporation, provided passenger vehicles for public transport and did not promote the business of private operators. The activity does not fall under the definition of 'Business Support Service' u/s 65(104c) of the Finance Act, 1994. Thus, the demand under this category is not sustainable.
Renting of Immovable Property Service: The demand of Rs.48,15,642/- was confirmed under 'Renting of Immovable Property Service'. The appellant argued that they are a non-profit statutory body providing spaces for passenger amenities, not for commercial purposes. The Tribunal disagreed, noting that properties were rented out for commercial purposes, including leasing to Gold Cinema. Hence, the appellant is liable to pay service tax under this category, but only within the normal period of limitation.
Time & Space for Advertisement Services: The demand of Rs.3,48,870/- was confirmed under 'Time & Space for Advertisement Services'. The Tribunal observed that the appellant is not an advertisement agency and that 'Sale of Space and Time for Advertisement' was taxable only from 01.05.2006. The demand pertains to 2007-08 to 2009-10, and is barred by limitation. Thus, the demand under this category is not sustainable.
Penalty: The Tribunal found no evidence of wilful suppression of facts intending to evade service tax. Therefore, the penalty imposed on the appellant is not sustainable and is set aside.
Order:
(i) The demands confirmed by invoking the extended period are not sustainable.
(ii) The demand under 'Business Support Service' is not sustainable.
(iii) The appellant is liable to pay service tax under 'Renting of Immovable Property Service' for the normal period of limitation.
(iv) The demand under 'Time & Space for Advertisement Services' is not sustainable.
(v) No penalty is imposable on the appellant.
(vi) The appeal is disposed of on these terms.
(Order pronounced in the open court on 22.03.2024)
TaxTMI 
• Category-wise results to explore all relevant documents on TaxTMI
Help Us Improve - by giving the rating with each AI Result:
TaxTMI 
TaxTMI 
