Chief Municipal Officer Vs Commissioner of Customs (CESTAT Delhi)
Summary: The CESTAT New Delhi considered whether a municipality was liable to service tax on two activities: providing space for display of advertisements through hoardings and renting/licensing its immovable properties, including vacant land, to agencies, persons and traders. The disputed period was 2009-10 to 2014-15, covering both the pre-negative-list and post-negative-list service tax regimes.
The appellant had received Rs. 3,06,738/- from hoarding rent during April 2009 to June 2012 and Rs. 3,39,22,974/- as rent from various immovable properties during April 2009 to July 2014. The Department proposed service tax of Rs. 39,22,945/- together with interest, penalties and late fee for non-filing of ST-3 returns. The demand was confirmed by the adjudicating authority and Commissioner (Appeals), leading to the appeal before the Tribunal.
The appellant contended that the expression “Renting of Immovable Property Service” had been incorrectly interpreted. It argued, relying particularly on Cuddalore Municipality Vs Joint Commissioner of GST & Central Excise, that the expression “any other person” meant a person other than the owner. It also argued that vacant land was excluded from the relevant definition and that arrears of rent had been taxed at an incorrect service tax rate. On advertisement receipts, the appellant maintained that it merely collected statutory licence fees under the Madhya Pradesh Municipalities Act, 1961 for allotting land on which advertisers erected hoardings, rather than selling advertising space. It further challenged penalties on the ground that there was no intention to evade tax.
