NAGAR NIGAM, AGRA Vs. COMMISSIONER (ADJ.), KANPUR

JUDGEMENT

(1.) THE assessee has preferred this appeal against the adjudication order dated 31 -12 -2012 whereby Service Tax of Rs. 56,74,946/ - has been for having provided the taxable - "Sale of Space or time for Advertisement" Service, during 1 -5 -2006 to 31 -3 -2011. As apparent from the show cause notice; the assessee's response thereto; and the adjudication order, the assessee claimed immunity to tax on several grounds including that it is an authority created under the U.P. Municipal Corporations Act, 1959; that it had provided no taxable service to the Municipal Corporation but had only collected tax for the Corporation under the provisions of the 1959 Act; and that a substantial portion of the spaces used for the advertisements were spaces belonging to private parties and therefore do not fall within the definition of the taxable service as spelt in Section 65(105)(zzzm) of the Finance Act, 1994, since neither the Corporation nor the assessee could have sold those spaces, in respect of which advertisements are said to have been made; and that there is no justification for invoking the extended period of limitation since there was no willful suppression or non -remittance of tax with an intent to evade remittance of tax by contravention of the provisions of the Act. It was also contended that in any event the issue would be Revenue neutral, since even if Service Tax was paid the service recipient could have availed the benefit of input credit. At the present stage we are not inclined to go into the issue of limitation or the justification for invocation of the extended period of limitation.

(2.) WE notice that a learned Division Bench of the Gujarat High Court in Selvel Media Services Pvt. Limited v. Municipal Corporation of City of Ahmedabad and Others - : [2010] 30 VST 653 (Guj.) has clearly ruled that fees collected by a Municipal Corporation for granting written permission for conducting the business of advertisement agency, being part of functions imposed on the Corporation under legislation; and where such fees is collected in respect of advertisements put up on premises/space not belonging to the Corporation levy of Service Tax under Section 65(105)(zzzm), would be impermissible since the property is not owned by the Corporation. In this view of the matter, prima facie, the levy of Service Tax to the extent advertisements by the assessee were in respect of spaces not owned by the Municipal Corporation, would not be liable to Service Tax.

(3.) IN the aforesaid circumstances and in the absence of any indication as to the quantum of Service Tax relatable to properties belonging to the Agra Municipal Corporation, we consider it appropriate to grant waiver of pre -deposit and stay of all further proceedings pursuant to the adjudication order dated 31 -12 -2012, on condition that the petitioner remits Rs. 13 lakhs (approximately 20% of the tax component), within eight weeks from today and reports compliance by 15 -10 -2013. In default of either deposit or reporting compliance as stipulated, there shall occur a failure of pre -deposit and the appeal would consequently stand rejected for failure of pre -deposit. Ld. counsel for the appellant is present in the Court, has noted this order and undertakes to communicate to the appellant, the obligations under the order.