SERVICE TAX ON LISENCE FEE RECEIVED BY THE MUNICIPAL CORTAION

[suhas phadke]

WHETHER SERVICE TAX IS APPLICABLE ON LISENCE FEE RECEIVED BY THE MUNICIPAL CORPORATION ( LOCAL GOVERMENT BODY) FOR ALLOWING ADVERTISING AGENCY TO PUT HIS KIOSK BOARD ? KEEP IN MIND FOLLOWING POINTS : AS U ALL AWARE THAT SERVICE TAX IS VALUE ADDED TAX AND WHEN CORPORATION RECEIVED LISENCE FEE THEN THERE IS NO VALUE ADDITION. SECONDLY CORPORTION DOES NOT CREAT A SPACE FOR ADVERTISEMTN. THE SPACE IS BEING CREATED BY THE ADVERTISING AGENCY. IF ANY BODY HAVE CASE LAW IN THIS MATTER. PL LET US KNOW. SUHAS PHADKE BARODA

[Brijesh Verma]

Dear Mr. Suhas,

The License fee received by the Municipal Corp. is definitely not classifiable as advertising service as rightly pointed out by you, but I am afraid, the same gets covered under the 'Selling of Space & Time for Advertisement' category. Please check...!!!

AI Summary

Service tax applicability on licence fees for advertising space: classification as selling of space and time may be determinative. Whether service tax applies to licence fees charged by a municipal corporation for permitting advertising kiosks/boards, given arguments that the corporation effects no value addition and does not create the advertising space; a respondent suggests the fee may be classifiable as Selling of Space & Time for Advertisement, framing the matter as one of service classification rather than an established adjudicative result.