2025 (7) TMI 1539 - AT - Service Tax

Levy of service tax - sale of space or time for advertisement service - renting of immovable property service - club or association service - CENVAT Credit on the LED score board - invocation of extended period of limitation - Penalty. Service tax for the period 01.04.2006 to 31.03.2010 under the category of sale of space or time for advertisement service - HELD THAT - The undisputed facts are that the appellant had entered into agreements with M/s. Sky Ads Integrated Pvt. Ltd. M/s. Artech Advertising and M/s. Frontier Group Pvt. Ltd. for providing space for putting up of electronic hoardings / advertisements against considerations mentioned in the respective agreements. The Department considered the said service is taxable under the category of sale of space or time for advertisement service as defined under Section 65(105)(zzzm) of the Finance Act 1994. The Commissioner in the impugned order observed that under the said agreements the appellant had permitted the licensees to put up advertisement hoardings and signages within the premises of the appellant on terms and conditions as specified n the said agreements. For using this facility the appellant was paid amounts as specified in the respective agreements. These receipts have been accounted by the appellant in their books of accounts under the income head Instadia Advt. charges received . Reliance placed in the case of Ahmedabad Bench of this Tribunal in CCE ST Rajkot Vs. Saurashtra Cricket Association 2018 (9) TMI 832 - CESTAT AHMEDABAD which has been upheld by the Hon ble Supreme Court 2023 (5) TMI 814 - SC ORDER . Therefore the services rendered by the appellant by letting out space to various agencies squarely fall within the scope of taxable service of sale of space or time for advertisement . Service tax for the period 01.06.2007 to 31.03.2010 under the category of renting of immovable property service - HELD THAT - The liability has been fastened on the appellant after the retrospective amendment by virtue of Section 76 of the Finance Act 2010 made effective from 01.06.2007. The learned Commissioner also referring to the said retrospective amendment has confirmed the demand for the period from 01.06.2007 to 31.03.2010. The appellant has vehemently opposed to the recovery of service tax on the basis of retrospective amendment invoking extended period of limitation - Therefore extended period of limitation cannot be invoked and liability if any be restricted to normal period only. Service tax for the period from 01.04.2005 to 31.03.2010 under the category of club or association service - HELD THAT - It is not in dispute that the appellant had allotted available rooms at its premises to their members on rental basis and the same was accounted for in their books of account. It is found that the services rendered by the appellant to their members cannot be leviable to service tax under the club or association service as held by the Hon ble Supreme Court in the case of State of West Bengal Vs. Calcutta Club Limited 2019 (10) TMI 160 - SUPREME COURT (LB) and followed by this Tribunal in the appellant s own case 2025 (2) TMI 1216 - CESTAT BANGALORE . Therefore the demand confirmed on this count is liable to be set aside. Eligibility for cenvat credit on the LED score board - HELD THAT - There are no merit in the observation of the learned Commissioner inasmuch as even though the appellant initially in the Financial Year 2004-05 included the value for closing depreciation; however later the amount of Rs.28, 64, 140/- was deleted giving effect that no depreciation claimed under the Income Tax Act on the cenvat credit amount availed by the appellant. Also the learned Commissioner s finding that the said LED score board has no nexus with the taxable service provided viz. Mandap Keeper service and other services is also devoid of merit. Therefore denial of cenvat credit on LED score board cannot be sustained. Invocation of extended period of limitation - HELD THAT - The learned Commissioner in the impugned order has rejected the said argument of the appellant holding that the show-cause noticed dated 20.04.2007 does not specifically covered advertisement services. There are no merit in the said observation of the learned Commissioner after reading the show-cause notice dated 20.04.2007 enclosed with the appeal paper book. It is specifically alleged referring to an advertisement agreement entered into between the appellant and M/s. Sporting Frontiers (India) Pvt. Ltd. that the appellant are required to discharge service tax under the category of advertising agency service. In such circumstances the demand cannot be sustained invoking extended period of limitation and be limited to normal period only. Penalty - HELD THAT - Since extended period of limitation cannot be invoked in demanding service tax under any of the above taxable categories imposition of penalty under Section 78 of the Finance Act 2010 is not warranted. The impugned order is modified by setting aside the confirmation of demand under the category of club or association service and denial of cenvat credit on LED score board; regarding demand under the categories of sale of space or time for advertisement service and renting of immovable property service the matter is remanded to the adjudicating authority to recompute the service tax liability with interest for normal period of limitation. All penalties are set aside - Appeal is disposed of.

Summary

ISSUES:

Whether service tax is payable for the period 01.04.2006 to 31.03.2010 under the category of 'sale of space or time for advertisement service'.Whether service tax is payable for the period 01.06.2007 to 31.03.2010 under the category of 'renting of immovable property service'.Whether service tax is payable under the category of 'club or association service' for services rendered to members.Whether the appellant is eligible for cenvat credit on LED scoreboard availed as capital goods.Whether the extended period of limitation is invokable for recovery of service tax under the above categories.

RULINGS / HOLDINGS:

Services rendered by letting out space for advertisements fall "squarely within the scope of taxable service of 'sale of space or time for advertisement'" as defined under Section 65(105)(zzzm) of the Finance Act, 1994, and the appellant is liable to discharge service tax for the relevant period.Service tax liability on 'renting of immovable property service' arose due to retrospective amendment by Section 76 of the Finance Act, 2010 effective from 01.06.2007; however, extended period of limitation cannot be invoked, and liability is restricted to the normal period only.Services rendered by the appellant to their members under the category of 'club or association service' are not leviable to service tax, consistent with the ratio of the Hon'ble Supreme Court in State of West Bengal Vs. Calcutta Club Limited, and the demand on this count is set aside.The denial of cenvat credit on the LED scoreboard is not sustainable as the appellant subsequently adjusted the gross block to exclude depreciation benefit, and there exists a nexus between the capital goods and the output taxable services; hence, cenvat credit is admissible.The invocation of extended period of limitation for service tax recovery under the 'sale of space or time for advertisement service' is not sustainable since the Department had issued a show-cause notice specifically alleging such services, limiting recovery to the normal period.Penalty under Section 78 of the Finance Act, 2010 is not warranted as extended period of limitation is not invokable.

RATIONALE:

The Court applied the definition of 'sale of space or time for advertisement service' under Section 65(105)(zzzm) of the Finance Act, 1994, including the wide interpretation of "in relation to" and "in any manner" as supported by precedent, holding that providing space used for advertising attracts service tax liability.Retrospective amendment by Section 76 of the Finance Act, 2010 was recognized as valid to impose service tax liability on renting of immovable property from 01.06.2007, but consistent with settled law, invocation of extended period of limitation is barred in such cases without mala fide.The Court relied on the Hon'ble Supreme Court's decision in State of West Bengal Vs. Calcutta Club Limited to exclude club or association services rendered to members from service tax levy, following binding precedent and prior Tribunal decisions.The admissibility of cenvat credit was examined under the Cenvat Credit Rules, 2004, particularly Rule 4(4), and the nexus requirement between capital goods and output taxable services was affirmed, rejecting denial based on initial depreciation claims.The Court considered the Department's prior knowledge and issuance of a show-cause notice specifically addressing advertisement services, thereby negating the applicability of extended period of limitation for the 'sale of space or time for advertisement service' category.Penalty imposition under Section 78 was rejected as it is contingent upon the extended period of limitation being applicable, which was not upheld.