2024 (9) TMI 5 - AT - Service Tax

Service tax liability confirmed for advertisement space, technical testing, property rental, and construction services with no exemptions available

CESTAT Kolkata held that appellant was liable for service tax on multiple services: advertisement space provision to agencies classified as 'Sale of Space ... Liability of service tax - Sale of space or time for advertisement service - Classification of service of Technical testing and analysis service and Commercial or industrial construction service - Renting of immovable property service - exemption from service tax - extended Extended period of limitation - penalty. Liability of service tax - sale of space or time for advertisement service - appellant submits that they themselves had not rendered any advertisement service, but had entered into agreements for providing advertisement rights to different advertisement agencies and accordingly the liability to pay Service Tax is on the advertisement agencies only - HELD THAT:- The appellant has provided advertisement rights to different advertising agencies namely, M/s. SELVEL Advertising Pvt. Ltd., M/s. Accord Advertising Pvt. Ltd.etc. for display of hoardings and kiosks. It is observed that this service is liable to service tax under the category of 'Sale of Space or Time for Advertisement'. Classification of service - technical testing and analysis service - appellant submits that they are a statutory agency and the service charges rendered by them are not exigible to Service Tax - HELD THAT:- The appellant has also engaged in providing ‘technical testing and analysis service’ by way of testing of concrete cube, testing of coarse aggregate and fine aggregates, testing of reinforcing bars, testing of bricks, testing of pH value of water, testing of strength of soil, non-destructive testing of civil engineering materials, etc., on the samples supplied by various agencies. For the above testing, HRBC receiving testing charges. It is observed that this service rendered by the appellant is appropriately classifiable under the category of ''Technical Testing and Analysis Service' Liability of service tax - appellant submitted that as this service is provided to Kolkata Metro Railways, they are not liable to pay service tax on the renting of immovable property service - HELD THAT:- The appellant have rented out the fourth and fifth floors of HRBC Bhawan, St. Georges Gate Road, Kolkata – 700 021 to KMRCL. It is observed that this service provided to Kolkata Metro Railways is appropriately classifiable under the category of 'Renting of immovable property service'. Classification of service tax - commercial or industrial construction service - appellant contend that the liability to pay Service Tax will fall on M/s. U.I.C. Infrastructure India Pvt.Ltd. - HELD THAT:- The appellant had undertaken ‘commercial or industrial construction service’ for Kolkata Metro Rail Corporation Ltd. (KMRCL). It is observed that the building constructed by the appellant is not for Metro Railways. One building is to be used for the Office of the General consultant of Kolkata Metro Rail Corporation Ltd and in case of the 2nd building, the lower stories will be used for shopping, the one or two upper stories may be utilized for residential purposes depending on actual requirement. Thus, this service is appropriately classifiable and liable to service tax under the category of 'Commercial or Industrial Construction service'. Exemption from service tax - HELD THAT:- There is no specific exemption available to the appellant for the above said services rendered by them to their clients on receipt of consideration. Accordingly, we do not agree with the submission made by the appellant that all the services rendered by them are not liable to Service Tax. Thus, the appellant is liable to pay service tax on the above said taxable services rendered by them. Extended period of limitation - penalty - HELD THAT:- The appellant being a statutory organization established by the Government, there is no mens rea on their part or intention to evade payment of Service Tax. It is also observed that the department has not brought in any evidence to substantiate the allegation that suppression of facts with intent to evade payment of tax on the part of the appellant. Accordingly, extended period of limitation cannot be invoked in this case to demand Service Tax - Accordingly, the demand, if any, is to be restricted to the normal period of limitation only. Since suppression of facts with intention to evade payment of tax is not established, no penalty imposable on the appellant. The demand confirmed in the impugned order by invoking the extended period of limitation set aside and the demand confirmed in the impugned order for the normal period of limitation upheld - For the purpose of quantifying the demand for the normal period of limitation, the matter is remanded back to the adjudicating authority. No penalty imposable on the appellant. Appeal allowed in part and part matter on remand. Issues:1. Demand of Service Tax on various services provided by M/s. Hooghly River Bridge Commissioners.2. Liability for Service Tax under different categories such as sale of space for advertisement, technical testing and analysis service, renting of immovable property service, and commercial or industrial construction service.3. Invocation of extended period of limitation for demanding Service Tax.Analysis:Issue 1: Demand of Service Tax on various services provided by M/s. Hooghly River Bridge CommissionersM/s. Hooghly River Bridge Commissioners (HRBC) is a statutory organization engaged in the construction of Vidyasagar Setu and other related projects. They provided services like sale of space for advertisement, technical testing and analysis service, renting of immovable property service, and commercial or industrial construction service. The Directorate General of Central Excise Intelligence (DGCEI) initiated an investigation and issued a Show Cause Notice demanding Service Tax. The Ld. Commissioner confirmed the demand, including interest and penalties, which led to the appellant filing an appeal against the order.Issue 2: Liability for Service Tax under different categoriesRegarding the liability for Service Tax under different categories, the appellant contended that they were not directly providing advertisement services but were facilitating advertisement agencies. However, the tribunal held that the service of providing advertisement rights is indeed liable for Service Tax. Similarly, the technical testing and analysis service, renting of immovable property service, and commercial or industrial construction service provided by HRBC were also found to be taxable under the respective categories. The tribunal observed that there was no specific exemption available for these services, thus upholding the liability for Service Tax.Issue 3: Invocation of extended period of limitation for demanding Service TaxThe appellant argued against the invocation of the extended period of limitation, stating the absence of willful suppression or intention to evade tax. The tribunal agreed with the appellant, noting that being a statutory organization, there was no mens rea or intent to evade tax. Citing a precedent, the tribunal held that the extended period of limitation cannot be invoked in this case. Therefore, the demand for Service Tax was restricted to the normal period of limitation, and no penalty was imposed on the appellant.In conclusion, the tribunal set aside the demand confirmed under the extended period of limitation, upheld the demand for the normal period, and remanded the matter back to the adjudicating authority for quantifying the demand. The Service Tax paid by the appellant was to be adjusted against the payable amount for the normal period of limitation.