TaxTMI 
TaxTMI 
2026 (6) TMI 180
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....ertisement Services'. The department, based on scrutiny of certain documents like agreement dt.06.02.2013 between the respondent and South Western Railways and award of contract dt.10.10.2012 by South Central Railways, as also, statements of Shri CDV Subba Rao, Director and CEO, and one Shri H.V. Surenderanath, Chief Operating Officer, formed a view that the respondents were providing Advertisement Services to Railways awarded through tender process; and that they were getting contracts issued by Railways for providing display of glow sign boards and other types of illuminated display boards for advertisements at Railway stations; and that use of Railway premises/space under license obtained is apparently a taxable service viz., 'Business Support Service' (BSS). The summary of the investigation conducted by the department for demanding service tax is cited below for better appreciation of the grounds, based on which the department had issued SCN :- "8. Scrutiny of documents viz., copies of license agreements with Railways, Awards of Contract, Annual Balance Sheets, Statement showing break-up of balance sheet figures, Copies of agreements entered into with other public/priv....
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....e fee is provided by the Railways to the respondent. The second part of the activity consists of providing advertisement services to various clients of the respondents, for which they are discharging the appropriate service tax on the said activity. They mainly contested the invocation of the grounds by the department that Railways were providing 'support service' and therefore, in such case, even though service is being provided by the Government, the service tax would be required to be paid by the respondent (recipient) on Reverse Charge Mechanism (RCM) basis. He has also submitted that the activity being provided by the Railways would more appropriately fall under the category of 'Renting of Immovable Property Service' (RIPS) and not under BSS. 4. The adjudicating authority examined the basic ground in the SCN i.e., whether the activity involved in the present transaction can be termed as support service or otherwise. He took into account the provisions contained in section 66D(a)(iv) of the Finance Act, 1994, governing negative list, which covers certain activities by the Government or local authority, where no service tax can be charged. The same entry, however, excludes so....
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....essee for advertisement purpose only vide S.No.13 of the agreement. I did not see any service provided by the Railways which constitute 'support services' as defined in Section 65D(a)(iv) of the Act. Under the agreements, the Railways are not under any obligation to provide any support services nor were the activity under the agreements outsourced by the assessee to Railways. 13.4 Hence, I conclude that allegation that the impugned activity of the assessee is to be classified/treated as 'support service' as alleged in Para 8 of the show cause notice, is not tenable. That is, neither the assessee has outsourced the activity of procurement of space on lease or license to Railways. Nor can Railways be said to be providing supporting service to the assessee. The transaction is on principal to principal basis whereby Railways has leased/licensed out its place/premises and the assessee has taken such lease/license for his business activity. Consequently, the demand of service tax raised on the basis of this allegation is not sustainable." 5. Apart from rebutting the basic ground of the SCN that the activities would fall under support service, he also examined the counter argu....
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....has relied on the grounds taken in the SCN. As regards alternative submission taken by the respondent that the service received by them from Railways would amount to sale of space up to 01.10.2014, he has submitted that this ground was not taken earlier and therefore, it cannot be now taken and the same needs to be re-examined by the adjudicating authority. 8. Learned Advocate for the respondent has submitted that the adjudicating authority has passed a well-reasoned order based on facts and legal provisions and the departmental appeal against the same is not sustainable. His first ground is that as alleged in the SCN and as apparent from the summary of investigation, the department suggested that Railways were providing advertisement services to respondent under the category of support services. He has also tried to take an additional ground that the said activity would fall within the category of 'Sale of space or time for advertisement', which was not taxable being in the negative list from 01.07.2012 till 01.10.2014. Even for the period beyond 01.10.2014, though the service of 'sale of space or time for advertisement' was taken out of the negative list, the liability of serv....
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....will include allowing or permitting the use of space in an immovable property, irrespective of the transfer of possession or control of the said immovable property. He has also submitted that apart from the said appeal being not maintainable on merit itself, the view taken by the adjudicating authority regarding non-invokability of extended period is also correct, as it is now well settled law that it is the burden of the department to prove suppression. He has relied on various case laws including Larsen & Toubro Ltd [2007 (211) ELT 513 (SC)], Tamil Nadu Housing Board [1994 (74) ELT 9 (SC)] and Uniworth Textiles Ltd [2013 (288) ELT 161 (SC)]. 10. Heard both sides and perused the records. 11. The issue, which is to be decided, is whether in the given factual matrix, the respondents were receiving support services from the Railways or otherwise. This is crucial to the issue, inasmuch as if they were receiving support services, then in such case, the service tax is payable by the respondent as service recipient under RCM. Secondly, whether the view on appropriate classification by adjudicating authority is correct or otherwise. 12. We have perused the order of the adjudicati....
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....ness of the respondent, who is engaged in advertisement business as advertisement and promotion is specifically included in support services and therefore, the services rendered by the Railways would fall under support service, is not correct. Learned Advocate has clarified that advertisement services require certain ingredients and it is obvious that the Railways did not provide any advertisement services to the respondent. The judgment in the case of Shah Publicity Vs CCE (supra) also supports the view that before it is covered under advertisement service, it must be brought out that the person providing the said service is making advertisement including basic planning of advertisement, mode of advertisement, display of advertisement, etc. None of these elements are present qua Railways. 13. We also note that it is an admitted position that the Railways have been considered as service provider in the present appeal. The reliance placed under section 66A for payment of service tax under RCM is only applicable to the extent that in respect of specified services, instead of service provider, the service recipient will be required to discharge the service tax in accordance with no....
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....RIPS. We have perused the letter dt.10.10.2012 awarding contract for display of commercial hoarding. If all the terms and conditions are holistically evaluated, it is apparent that Railways have allotted specified area/ location for which they are not only charging yearly license fee but also taking security deposit. Thus, Railways have provided specified area to respondent, to the exclusion of others, for the purpose of putting up hoardings, sign boards, etc. Certain standard terms and conditions applicable while letting out a space by a person have been incorporated and those terms and conditions, in itself, cannot make the said agreement as an agreement for granting advertising rights. The license fee is also used for rent for letting out space when a lease and license agreement is signed between lesser and lessee. We also find that the adjudicating authority has taken into account the explanation-2 to the definition, which includes allowing or permitting use of space in immovable property irrespective of transfer of possession or control of said immovable property. As is apparent from the agreement that Railways were providing certain specified demarcated space or location wher....
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....the grounds that impugned activity of the respondent is not classifiable or treated as 'support service', as alleged in the SCN and also because the said transaction between the Railways and the respondent clearly fell within the definition of RIPS. Therefore, having decided the issue on merit that no demand of service tax can be made from the respondent, there was obviously no need to appropriate any amount paid towards the said demand irrespective of the period as long as the entire period was the subject matter of the SCN as well as impugned order. 18. The department has also contended that findings of the adjudicating authority as regards invocation of extended period being not proper and legal. They have mainly contested that the department came to know about the while issue only through detailed examination of agreements between the Railways and the respondent and after recording statement of Shri C.D.V. Subba Rao, Director and CEO of respondent company. It was also pointed out that as the respondents were liable to pay service tax on license fee under RCM, they were required to declare various details concerning license fee paid by them to Railways and tax liability on su....