TaxTMI 
TaxTMI 
2010 (3) TMI 1011
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....reinafter referred to as, "the AMC"). As a part of the statutory duties and functions imposed by virtue of provisions of the Bombay Provincial Municipal Corporation Act, 1949 (hereinafter referred to as, "the BPMC Act"), AMC is required to grant written permission for erecting, fixing, exhibiting or retaining any sky-sign or advertisement of the kind prescribed by Rules upon any land, building, wall, hoarding or structure. The case of the petitioner is that since last more than fifty years, AMC has been permitting placing of advertisements in and on private properties and AMC charges fees at the prescribed rates for hoardings in and on private properties in the city of Ahmedabad. The petitioner has been paying such fees regularly. The respondent-AMC vide impugned communication dated May 6, 2008 (annexure A) called upon the petitioner to pay service tax on the licence fee charges for 2006-07 on the advertising boards put up on private properties. This was followed by communications dated July 8, 2008, September 30, 2008, October 6, 2008, July 14, 2009 and July 18, 2009. It appears that the petitioner has deposited various amounts from time to time towards such demand of service t....
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....n called upon to make payment of service tax by the Service Tax Department, AMC has sought to recover such service tax, after paying the same to the Service Tax Department, from persons like the petitioner to whom written permission is granted upon payment of licence fees. It was submitted that if AMC is not liable to pay service tax, there is no question of AMC being required to make payment to the Service Tax Department and recover the same from the petitioner. On behalf of respondent No. 3, attention was invited to paragraph Nos. 7 and 8 of the affidavit in-reply dated November 4, 2009, to submit that it was not relevant whether AMC was owner of the space let out for billboards/hoardings in respect of such billboards/hoardings put up in or on private properties within the city of Ahmedabad, nor was it relevant whether AMC was charging any rent in this regard. That so long as service is provided by AMC, irrespective of the fact as to who holds the material/ property on the basis of which service is provided, the service rendered becomes taxable event and as laid down in the case of Empire Industries Limited v. Union of India [1987] 64 STC 42 (SC); [1985] 20 ELT 179 (SC), owner....
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....for a licence. A plain reading of sections 244 and 245 of the BPMC Act makes it clear that the said provisions are for the purposes of regulating and controlling the erection, etc., of sky-signs and/or billboards, hoardings, etc., to ensure that the structure so erected does not pose as a public hazard either by virtue of projection/abutment on a public road/street, or by way of obstructing vision, or any such similar hazard to the public at large. Hence, granting of written permission, after ensuring that the structure so erected complies with the relevant bye-laws and/or the building regulations in force from time to time, is a part and parcel of function of a Municipal Corporation in the form of a duty to the public to ensure a better Municipal Government of the city and cannot be termed to be a service rendered to the petitioner so as to be covered by the meaning of the definition of "taxable service" envisaged by section 65(105)(zzzm) of the Service Tax Act. Section 65 of the Service Tax Act provides in the opening portion that in Chapter 5, unless the context otherwise requires, the definition provided in various sub-sections would become applicable. Sub-section (105) a....
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....er ensuring compliance with the requisite regulatory requirements for a fee. AMC is not rendering any service to the petitioner. It may be that in a wider sense, the regulatory function of AMC could be termed to be a public service for ensuring safety of public at large or providing a hazard-free environment within the local limits of AMC. However, the service envisaged by section 65(105)(zzzm) of the Service Tax Act, is not of this nature and therefore, there is no question of AMC being charged service tax in relation to the fees collected for granting written permission in terms of sections 244, 245 and 386 of the BPMC Act read together. The property being admittedly owned by a private person, as distinguished from AMC, a public body, the act of granting written permission cannot be treated to be a sale of space for advertisement, that is, providing space for display. Therefore, once it is found that AMC is not rendering any taxable service to the petitioner, in the facts of the present case, it is not possible to uphold the action of AMC in calling upon the petitioner to make payment of service tax. There is one more aspect of the matter. The provision nowhere envisages AMC b....