2026 (2) TMI 964 - AT - Service Tax

Sale of advertising space on property is not an advertisement service when entity merely permits display; tax demand set aside.

Affixing advertisements on a transport operator's buses by a non advertising entity does not constitute 'sale of space or time for advertisement' where ... Sale of space or time for advertisements - renting of immovable property services - taxability of amounts shown in balance sheet/Income Tax Return - taxability of fees, fines, penalties and forfeited amounts - display of advertisement on assessee's property by non advertising agency not taxable as sale of space/time - HELD THAT:- We find that the issue is no longer res integra has submitted by learned counsel for the appellant we find that this Bench vide Final Order [2024 (3) TMI 1103 - CESTAT NEW DELHI], [2024 (3) TMI 858 - CESTAT NEW DELHI] and [2024 (3) TMI 1513 - CESTAT NEW DELHI]. Appeal is allowed with consequential relief if any as per law. Issues: (i) Whether amounts realized by affixing advertisements on State Transport Corporation buses constitute 'sale of space or time for advertisement' taxable as service tax; (ii) Whether amounts reflected in balance sheet/ income tax returns or alleged sundry debtors/canteen stall receipts attract service tax as renting of immovable property or similar taxable service.Issue (i): Whether affixing advertisements on buses amounts to sale of space or time for advertisement services.Analysis: Precedents examining display of advertisements on an assessee's property where the assessee is not an advertising agency were applied. The reasoning distinguishes an entity that merely permits advertisements on its property from an advertising agency providing sale of advertising space or time. Prior decisions cited treat realization of charges for display on the assessee's property as not constituting taxable advertisement services where no advertising agency activity is undertaken.Conclusion: The demand confirmed under the category of sale of space or time for advertisement is set aside; decision in favour of the assessee.Issue (ii): Whether amounts shown in balance sheet/ income tax returns or alleged sundry debtors/canteen stall receipts attract service tax as renting of immovable property or similar taxable service.Analysis: Authorities addressing taxation of amounts merely recorded in balance sheet or income tax returns and assessments based on differences in sundry debtors were applied. The decisions recognize that entries in financial statements or income tax returns, without independent evidence of a taxable service transaction, do not ipso facto attract service tax. The reasoning treating realization of amounts shown in accounts as taxable service was examined and rejected on the facts and precedent.Conclusion: The demand confirmed under the category of renting of immovable property and demands founded on balance sheet/ income tax return entries are set aside; decision in favour of the assessee.Final Conclusion: The appeals are allowed and the impugned confirmations of service tax demand are set aside, resulting in relief for the assessee with consequential relief if any as per law.Ratio Decidendi: Realization of amounts by a non advertising entity for permitting advertisement display on its property does not constitute sale of space or time for advertisement services, and mere entries in balance sheet or income tax returns are not sufficient to establish liability for service tax without independent evidence of a taxable service transaction.