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Judgment
Dr. Rachna Gupta, J
The appellant herein, M/s. DLF Assets Pvt. Ltd. are engaged in providing taxable services namely Management or Business Consultancy Services, Renting of Immovable Property Services, Management, Maintenance or Repair Service, Advertising time or space. While conducting audit of the appellant’s record department observed that the appellants were providing space to their clients in Special Economic Zone (hereinafter referred as SEZ) buildings to display their name and signs. The appellant had booked this income as signage income and had classified the service as ‘Renting of Immovable Property Service’, however, had availed exemption from payment of service tax by claiming their activity as specified service in terms of Notification No. 09/2009-ST dated 03.03.2009 read with Notification No. 17/2011-ST dated 01.03.2011. The department formed an opinion that service of display of signage is properly classifiable under the category of sale of space or time for ‘Advertisement Service’ which is not a specified service for the authorised operation in SEZ, for the purpose of claiming exemption from payment of service tax in terms of the aforesaid notification.The department also observed that alleging non-payment of service tax on signage income following earlier show cause notices have been issued to the appellant:
S. No.
SCN No./File No.
Dated
Period Involved
Amount Involved
O.I.O
1.
65/Audit/2013-14
15.10.2013
2007-08 to 2011-12
9,20,54,853/-
28.12.2015
2.
52/Div-I/2014-15
06.05.2014
2012-13
6,90,859/-
31.01.2017
3.
13/Div-I/2015
17.04.2015
2013-14
8,79,597/-
06.07.2023
For the impugned period of Financial Year 2014-15, the signage income received by the appellant is observed to be value of Rs.1,05,10,027/-. The payable service tax is Rs.12,99,039/-. Since the same has not been paid by the appellant, also based upon the legal discussion in the earlier show cause notice dated 15.10.2013 that the aforesaid amount of Rs. 12,99,039/-(Rs.12,61,203/- + Rs.25,224/- + Rs.12,612/-) has been proposed to be recovered from the appellant along with the proportionate interest and the appropriate penalties. Additional Commissioner vide Order-in-Original No. 02/2017 dated 08.03.2018 has confirmed the demand of Rs.6,99,227/- along with interest after dropping the demand of Rs.5,99,812/-. Penalty as mentioned in the order has also been imposed. In an appeal against the said order, Commissioner (Appeals) vide Order-in-Appeal No. 132/2018 dated 21.08.2018 has upheld the said Order-in-Original by rejecting the appeal. Being aggrieved, the appellant has approached the present Tribunal.
We have heard Shri Kunal Agarwal, learned Advocate for the appellant and Shri Rajeev Kapoor, Authorized Representative for the department.
Learned counsel for the appellant has mentioned that appellant is a co-developer of four SEZ’s out of which two are situated is Gurgaon and one each is situated in Hyderabad and Chennai. The appellant is registered with the service tax department for rendering the taxable services as have already been mentioned in the show cause notice. However, appellant is renting out immovable properties in the SEZ to the units therein. It has also renting out space to said SEZ units/approved units to whom the buildings in SEZ area have been rented out so as to enablethem to display the name of the entity for the purpose of identification. It is mentioned that irrespective the appellant is separately charging a signage income for renting the said display boards, however, the said income forms the part of rent/lease agreement with the units in SEZ as is apparent from clause 11 of the agreement on record dated 29.08.2011. Since the taxable service was provided to SEZ units, the exemption was available to the appellant in terms of Notification No. 12/2013 dated 01.07.2013. It is further impressed upon that the initial show cause notice had proposed the demand alleging the wrongful availment of Cenvat credit also. The said demand has been dropped by departmental adjudicating authority itself. The demand with respect to signage income has also been dropped by this Tribunal in the appellant’s own case titled as M/s. DLF Assets Pvt. Ltd. Vs. Commissioner of Service Tax, Delhi-I reported as 2020 (11) TMI 35-CESTAT New Delhi
4.1 Learned counsel further impressed upon that even reliance upon any of the notification is not relevant for seeking exemption from payment of service tax as the said exemption flows from the SEZ Act itself in terms of Section 26 of Special Economic Zone Act, 2005 (hereinafter referred as SEZ Act). Sub-clause 1(e) of Said Section 26 is impressed upon. The applicability of Notification 9/2009-ST is also redundant, in view of sub-section (2) of Section 26, according to which the exemption etc. has to be provided as per the manner prescribed by the Central Government and prescribed “in terms of Section 2 (w) of SEZ Act means prescribed by the rules made by Central Government under SEZ Act”, hence reliance of the adjudicating authority below upon the notifications and the alleged non-compliance thereof for denying the tax exemption benefit to the appellant is not sustainable. Learned counsel has also submitted that the service of sale of space or time for advertisement is otherwise covered under negative list for the period post 01.07.2012. While praying for setting aside the order under challenge and praying for the impugned appeal to be allowed learned counsel has relied upon the following decision:
(i) SRF Limited Vs. Commissioner of Customs, Central Excise & Service Tax, LTU New Delhi and Commissioner of CGST, and Central Excise, Indore reported as 2022 (4) TMI 989 – CESTAT New Delhi
(ii) Trimurthy Industrial Co. Op. Soc. Ltd. Vs. Commissioner of Central Excise, Pune-I reported as 2018 (1) TMI 268-CESTAT Mumbai
(iii) Cummins Turbo Technology Vs. Commissioner of Customs, Central Excise & Central Tax, Indore reported as 2023 (11) TMI 1077 – CESTAT New Delhi
(iv) Haiko Logistics India Pvt. Ltd. Vs. Commissioner of Service Tax – Delhi 3 and Comiissioner of Central GST Audit-II (Vice Versa) reported as 2023 (8) TMI 539- CESTAT New Delhi
(v) Kusum Healthcare Pvt. Ltd. Vs. CCE & ST, Alwar (Raj.) reported as 2023 (3) TMI 173-CESTAT New Delhi
While rebutting these submissions, learned Departmental Representative has reiterated the findings as were arrived at by the original adjudicating authority in the order dated 08.03.2018. Wherein it has been held that the signage income is the consideration towards providing a taxable service of sale of space or time for Advertisement service classifiable under Section 65(105)(zzzm) of the Finance Act, 1994 and it is not classifiable under Renting of Immovable Property Services classified under Section 65(105)(zzzz) of the Act.
5.1 Learned Departmental Representative further impressed upon that Section 26(1)(e) of SEZ Act provides exemption from payment of service tax upon services provided to an SEZ unit but only for its
authorized operations. The adjudicating authority has observed that as per the letter of approval issued in favour of the appellant by SEZ authorities, sale of space or time for advertisement services was not the approved service during the concerned period. Hence, the signage income in the hands of appellant is taxable. The proposed demand has been confirmed on this count. Based upon the clause (g) of Section 66D (negative list), the signage income received w.e.f. 01.10.2014 and the service tax thereupon (Rs.5,99,812/-) has been dropped. It is impressed upon that the adjudicating authority have been quite judicious while arriving at the conclusion. There is no infirmity in the order under challenge which has upheld the aforesaid findings of Order-in-Original. With these submissions, the appeal is prayed to be dismissed.
Having heard the rival contentions and perusing the entire records, The question to be adjudicate in the impugned appeal is:
“Whether appellant is entitled for tax exemption on signage income received whilerenting out space for the signages to the units in the SEZ area.”
To adjudicate the issue, foremost we need to understand the concept of SEZ under SEZ Act.Section 51 of SEZ Act states that the provisions of this Act shall have effect notwithstanding anything inconsistent there with, contained in any other law for the time being in force or in any instrument having affect by virtue of any law other than this Act. According to Section 2(c), “authorized operations” means operations which may be authorized under sub-section (2) of section 4 and sub-section (9) of section 15 of. For ease of reference, we reproduce these two sections below:
Establishment of Special Economic Zone and approval and authorisation to operate it to, Developer-
(1) The Developer shall, after the grant of letter of approval under sub-section (10) of section 3, submit the exact particulars of the identified area referred to in sub-sections (2) to (4) of that section, to the Central Government and thereupon that Government may, after satisfying that the requirements, under sub-section (8) of section 3 and other requirements, as may be prescribed, are fulfilled, notify the specifically identified area in the State as a Special Economic Zone:
Provided that an existing Special Economic Zone shall be deemed to have been notified and established in accordance with the provisions of this Act and the provisions of this Act shall, as far as may be, apply to such Zone accordingly: Provided further that the Central Government may, after notifying the Special Economic Zone, if it considers appropriate, notify subsequently any additional area to be included as a part of that Special Economic Zone.
(2) After the appointed day, the Board may, authorise the Developer to undertake in a Special Economic Zone, such operations which the Central Government may authorise.
Setting up of Unit.-
(1) Any person, who intends to set up a Unit for carrying on the authorised operations in a Special Economic Zone, may submit a proposal to the Development Commissioner concerned in such form and manner containing such particulars as may be prescribed: Provided that an existing Unit shall be deemed to have been set up in accordance with the provisions of this Act and such Units shall not require approval under this Act.
(2) On receipt of the proposal under sub-section (1), the Development Commissioner shall submit the same to the Approval Committee for its approval.
(3) The Approval Committee may, either approve the proposal without modification, or approve the proposal with modifications subject to such terms and conditions as it may deem fit to impose, or reject the proposal in accordance with the provisions of sub-section (8):
Provided that in case of modification or rejection of a proposal, the Approval Committee shall afford a reasonable opportunity of being heard to the person concerned and after recording the reasons, either modify or reject the proposal.
(4) Any person aggrieved by an order of the Approval Committee, made under sub-section (3), may prefer an appeal to the Board within such time as may be prescribed.
(5) No appeal shall be admitted if it is preferred after the expiry of the time prescribed therefore:
Provided that an appeal may be admitted after the expiry of the period prescribed therefore if the appellant satisfies the Board that he had sufficient cause for not preferring the appeal within theprescribed time.
(6) Every appeal made under sub-section (4) shall be in such form and shall be accompanied by a copy of the order appealed against and by such fees as may be prescribed.
(7) The procedure for disposing of an appeal shall be such as may be prescribed: Provided that before disposing of an appeal, the appellant shall be given a reasonable opportunity of being heard.
(8) The Central Government may prescribe,-
(a) the requirements (including the period for which a Unit may be set up) subject to which the Approval Committee shall approve, modify or reject any proposal referred to in sub-section (3);
(b) the terms and conditions, subject to which the Unit shall undertake the authorised operations and its obligations and entitlements.
(9) The Development Commissioner may, after approval of the proposal referred to in sub- section (3), grant a letter of approval to the person concerned to set up a Unit and undertake such operations which the Development Commissioner may authorise and every such operation so authorised shall be mentioned in the letter of approval.
Thus, ‘authorized operations’ under the SEZ Act are those operations of a developer authorised by the Board under sub-section (2) of Section 4 or those operations of a unit authorised by the Development Commissioner under sub-section (6) of Section 9. Thus, as long as the operations by the Developer are authorised by the Board or, as the case may be, are authorised by the Development Commissioner, the exemption from tax is available to the developer under Section 26 of the SEZ Act applies. Neither Section 26 nor Section 4 or even Section 15 provide for authorization of the inputs or input services to be used in the operations. The only authorization required is of the operations of the developers or the unit i.e. what the developer or the unit does and not what inputs or input services are used by the developer or unit. Once this authorization is obtained, all inputs and input services which are used for such operations get exempted by virtue of Section 26.Section 26(1) however, provides that these exemptions are 'subject to the provisions of sub- section (2)'. Sub-section (2) reads as follows:
(1)……
(2) The Central Government may prescribe, the manner in which, and, the terms and conditions subject to which, the exemptions, concessions, drawback or other benefits shall be granted to the Developer or entrepreneur under sub-section (1)
From the perusal of above provisions, it is clear that the first requirement for exemption under section 26 is the authorisation of the operations of the developer or the unit. The second requirement is the manner, terms and conditions prescribed subject to which the exemptions are granted to the developer or the unit. The term 'prescribed has been defined in section 2(w) as follows:
Section 2
(w) "prescribed" means prescribed by rules made by the Central Government under this Act;
Thus, the manner, terms and conditions as prescribed under the Rules framed under SEZ Act, i.e., under the SEZ Rules.
To sum up, if a developer has to enjoy the exemptions available under section 26 of the SEZ Act, its operations should be authorised by the Board under Section 4 and it should meet the manner, terms and conditions laid down under the SEZ Rules. Similarly, if a unit located in the SEZ has to enjoy the exemptions available under Section 26; its operations must be authorised by the Development Commissioner under Section 9 and it should meet the manner, terms and conditions prescribed under the SEZ Rules.For exemption from the service tax, the concerned SEZ Rules are Rules 22 and 31.
We also observe that while the SEZ Act itself provides for exemption from service tax (as well as Central Excise duty and Customs duty), exemption notifications were also issued by the Government under the respective laws with some conditions. The exemption notifications in dispute in this case are service tax exemption notifications ST-40/2012 dated 20.06.2013 and ST-12/2013 dated 01.07.2013. This duplication of exemption under the two provisions viz, SEZ Act and Rules and under exemption notifications under the Finance Act, 1994 has been discussed at length. Hon’ble Andhra Pradesh High Court in the case of GMR Aerospace Engineering Limited and another Vs. Union of India and Ors. reported as 2019 (8) TMI 748, observed as follows:
“22. It may be noted that sub-section (1) of section -26 begins with the words “subject to the provisions of sub-section (2)”. Sub-section (2) authorizes the Central Government to prescribe the manner in which and the terms and conditions subject to which exemptions shall be granted to the developer or entrepreneur undr sub-section (1). However, the word “prescribe” appearing in sub-section (2) of section 26 has to be understood with reference to the definition of the word “prescribed” appearing in Section 2(w) of the SEZ Act, 2005. Section 2(w) of the Act reads as follows:
“prescribed means prescribed by rules made by the Central Government under this Act.”
Therefore, the terms and conditions subject to which the exemptions are to be granted under sub-section (1) of Section 26 should be prescribed by the Rules made by the Central Government under the SEZ Rules, 2006 issued in exercise of the power conferred by Section 55 of the SEZ Act.
This Tribunal also in the case of M/s. DLF Assets Pvt. Ltd. Vs. The Commissioner, Service Tax, Delhi-I reported as 2020 (11) TMI 35-CESTAT New Delhi, has considered the issue as to whether the services rendered by the appellant to units in SEZ would be exempted from payment of service tax in view of the provisions of the SEZ, Act and the notification to this effect.The Tribunal in this decision has held as follows:
The conditions set out in the Notification dated March 3, 2009 were satisfied. Section 26(2) of the SEZ Act does provide that the Central Government may prescribe the manner in which, and the terms and conditions subject to which, the exemptions shall be granted to the Developer under sub-section (1) but what is important to notice, is that, the word “prescribed” would mean “prescribed by rules made by the Central Government under the SEZ Act,” in view of the definition of “prescribed under Section 2(w) of the SEZ Act. The ‘prescribed manner’ as mentioned in Section 26(2), has been provided under Rule 31 of the SEZ Rules, whereby it is stated that exemption from payment of service tax shall be to any service provider for the authorized operations in a Special Economic Zone.
Reliance in this regard is also placed on Norasia Container Lines Vs. CCE New Delhi reported as 2011 (23) STR 295 (Tri-Delhi), wherein it is held that it is clear from Section 26 and Rule 31 of the SEZ Act that there is no restriction regarding the consumption of the services and the exemption is extended to the services rendered to a unit in the SEZ for the purpose of authorized operations in the SEZ. In the case of Reliance Ports and Terminals Limited Vs. CCE, Rajkot, 2013-TIOL-1473-CESTAT-AHM, This Tribunal negated the view of the department and held that there was no requirement to pay service tax and then claim refund since the SEZ Act itself provides for complete exemption and the notification is merely a means to operationalize that scheme. The relevant portion of the decision is extracted herein in below:
From the provisions contained in Section 26 (1)(e) of the SEZ Act, read with Rule 30 (10) of the SEZ Rules, 2006, it can be seen that no service tax is payable on the services provided by a service provider to a SEZ unit. Further, Sec. 51 of the SEZ Act also makes an over-riding provision that SEZ Act shall have effect even if there is anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any other law. It is accordingly held that Notification No.9/2009-ST and amended Notification No. 15/2009-ST have been only issued to operationalize the exemption/immunity available to SEZ unit under Sec. 26(1)(e) of the SEZ Act, 2005.
In the light of above discussion, we hereby hold that the notification has imposed a condition which is contrary to the overall exemption provided in the statute itself by virtue of Section 26 read with Rule 31. The exemption notification cannot override the statue. Reliance is placed on Ispat Industries Ltd. Vs. Commr. of Customs, Mumbai reported as 2006 (202) ELT 561 SCwherein it has been held that a rule which sub serves the purpose of the parent statute only has to be followed. Relevant paragraph is extracted here for reference:
"26. In our opinion, if there are two possible interpretations of a rule, one which subserves the object of a provision in the parent statute and the other which does not, we have to adopt the former, because adopting the latter will make the rule ultra vires the Act.
In this connection, it may be mentioned that according to the theory of the eminent positivist jurist Kelsen (The Pure Theory of Law) in every legal system there is a hierarchy of laws, and whenever there is conflict between a norm in a higher layer in this hierarchy and a norm in a lower layer the norm in the higher layer will prevail (see Kelsen's. 'The General Theory of Law and State')
–
In our country this hierarchy is as follows:
(1) The Constitution of India;
(2) The Statutory Law, which may be either Parliamentary Law or Law made by the State Legislature;
(3) Delegated or subordinate legislation, which may be in the form of rules made under the Act, regulations made under the Act, etc.;
4) Administrative orders or executive instructions without any statutory backing.
The Customs Act falls in the second layer in this hierarchy whereas the rules made under the Act fall in the third layer. Hence, if there is any conflict between the provisions of the Act and the provisions of the Rules Rules, the former will prevail. However, every effort should be made to give an interpretation to the Rules to uphold its validity. This can only be possible if the rules can be interpreted in a manner as to be in conformity with the provisions in the Act, which can be done by giving it an interpretation which may be different from the interpretation which the rule could have if it was construed independently of the provisions in the Act. In other words, to uphold the validity of the rule sometimes a strained meaning can be given to it, which may depart from the ordinary meaning, if that is necessary to make the rule in conformity with the provisions of the Act. This is because it is a well settled principle of interpretation that if there two interpretations possible of a rule, one of which would uphold its validity while the other which would invalidate it, the former should be preferred."
The above decision has also been followed in catena of decisions one of which is New Holland Tractors India Pvt. Ltd. V. Commr. Of C. Ex. Reported as 2010 (253) ELT 249 (Tri-Del.)
Otherwise also, the provisions of SEZ Act have the overriding effect in terms of Section 51 of the Act as already mentioned above. By virtue of Section 51 of the SEZ Act, the provisions of the SEZ Act and the SEZ Rules are mandated to have overriding effect over the provisions contained in any other Act. Therefore, all the activities relating to SEZ shall be guided by the provisions contained in the SEZ Act and the SEZ Rules.
It is seen that the SEZ Act provides for exemption from service tax payable under the Finance Act, 1994 on the taxable services provided to a Developer or Unit to carry on the authorized operations in the Special Economic Zone. Reliance in this regard is placed on the decision of the Hon'ble Tribunal in the case of Intas Pharma Ltd. vs Commissioner of Service Tax, Ahmedabad, reported as 2013 (32) STR 543 (Tri. Ahmd.). The relevant paras are extracted as under:
We notice that the Special Economic Zones Act, 2005 (Central Act 28 of 2005) was enacted providing for SEZ within the territory of India and for providing inter alia immunities/exemptions fromtaxes/duties/cesses. Section 7 of the 2005 Act enjoins that any goods or services exported outside, or imported into, or procured from the domestic tariff area, by a unit in SEZ or a developer shall, subject to such terms and conditions and limitations, as may be prescribed be-exempted from payment of taxes/duties/cesses under all enactments specified in the First Schedule. The First Schedule does not enumerate the Act (Finance Act, 1994) as among the enactments in respect of which exemption from taxes/duties or cesses is available under Section 7 of the 2005 Act. However, Section 26(1)(e) enacts that subject to the provisions of sub-section (2) thereof, every developer and entrepreneur shall be entitled to exemption from Service Tax under Chapter (V) of the Act on taxable services provided to a developer or unit to carry on the authorised operations in a SEZ.
In view of the legislated exemption supra and since provisions of the 2005 Act are provided an overriding effect vide Section 51; and absent any provision in the Act which eclipses the overarching trajectory of the 2005 Act, the immunity to Service Tax in respect of taxable services provided in relation to SEZ is a legislatively enjoined immunity.
Hon’ble Supreme Court also in the case of Suresh Nanda Vs. CBI reported as 2008 AIR SC 1414 has held that SEZ is a special law for SEZ transactions and has to be preferred over the Finance Act. The specific paragraph for the said decision is as follows:
Thus, the Act is a special Act relating to a matter of passport, whereas Section 104 of the Cr.P.C. authorizes the Court to impound document or thing produced before it. Where there is a special Act dealing with specific subject, resort should be had to that Act instead of general Act providing for the matter connected with the specific Act. As the Passports Act is a special act, the rule that "general provision should yield to the specific provision" is to be applied. See: Dam Vaiaji Shah and Anr. v. Life Corporation of India and Ors. AIR 1966 SC 1351; Gobind Sugar Mills Ltd. v. State of Bihar and Ors. MANU/SC/0486/1999; and Belsund Sugar Co. Ltd. v. State of Bihar and Ors. MANU/SC/0457/1999
The Act being a specific Act whereas Section 104 of Cr.P.C. is a general provision for impounding any document or thing, it shall prevail over that Section in the Cr.P.C. as regards the passport. Thus, by necessary implication, the power of Court to impound any document or thing produced before it would exclude passport.
The Hon’ble Apex Court in another decision titled as Sanwarmal Kejriwal Vs. Vishwa Co-operative Housing Society reported as AIR 1990 SC 1563 has held that non-obstant clause has the overriding effect and it shall override any other contrary law to the effect. It is now clear that Section 26(1)(e) of SEZ ACT which read with Rule 31 of SEZ Rules, exempts the services rendered to SEZ units for their authorized operations from payment of service tax. SEZ Act and Rules there under have overriding effect in terms of Section 51 of SEZ Act. Thus any notifications including impugned Notification 9/2009-ST is issued in exercise of powers under Section 93 of the Act (subsequently amended vide Notification No. 12/2012-ST dated 01.07.2013 is not applicable in the light of SEZ Act and Rules as discussed above due to the overriding effect of the Act.
Reverting to the facts of the present case, we observe that the appellant, a co-developer of SEZ has rented out immovable properties to units in SEZ along with same spare to these units to enable them to put their display boards against signage charges. The demand of service tax on this signage charges has been confirmed on the ground that exemption on services rendered to SEZ units envisaged under Section 26 of the SEZ Act is carried through Notification No.9/2009-ST dated 3.3.2009 as amended vide Notification No. 12/2012-ST dated 01.07.2013, and under said notification exemptions is available only by way of refund and thus, the appellant is not eligible for ab-initio exemption. It may be noted that the impugned proceedings do not dispute the fact that the renting of immovable property services provided by the appellant are used by SEZ units for authorized operations and consumed wholly within the SEZ. When the services rendered fully exempt in terms of provision of the SEZ Act, the condition of exemption by way refund imposed under the Act is inconsistent with provisions of the SEZ Act. In such a case, the above notification has to give way to provisions of the SEZ Act, whereby the subject services rendered by the appellant are fully exempt from payment of service tax, ab-initio. We also observe that the present show cause notice without even invoking the provisions prevailing during the relevant period, was issued in continuation to the previous show cause notices proposing demand of Rs.12,99,039 for the subsequent period i.e. 2014-15 on the signage charges under Section 73(1A) of the Act starting that the allegations as raised in the previous show cause notice shall remain same for this show cause notice. Once it has already been held in appellant’s own case reported at DLF Assets Pvt. Ltd. Vs. The Commissioner, Service Tax, Delhi-I 2020 (11) TMI 35-CESTAT New Delhi and DLF Assets Pvt. Ltd. Vs. Principal Commissioner of GST, Delhi North 2023 (7) TMI 881- CESTAT New Delhi wherein in light of the overriding effect of provisions of the SEZ Act it has been held that, since the space given to SEZ units for displaying their name for identification purpose, for which the appellant charged signage charges, are undisputedly used by such SEZ units for their authorized operations, such activity of renting out space for display of name would be exempt from payment of service tax under the SEZ Act. The issued of overriding effect of provisions of the SEZ Act, particularly over the inconsistent notification issued under the Act, is no longer res-integra and stands settled in favour of the assesses, inter alia.
Irrespective appellant claimed the tax exemption citing the said notification but the statutory scheme as discussed above shall still be relevant and exemption benefit cannot be denied. The findings are therefore held not sustainable. The adjudicating authority while denying has also held that the service of sale of space and time for advertisement is not the approved service, however, we could not find any basis on record to support those findings. No letter of approval has been found attached on the record of the impugned appeal memo. Otherwise also, the same has not been the ground taken in the show cause notice.
The findings based on these observations will definitely be beyond the scope of show cause notice and are not sustainable for the said reason. Also the present show cause notice raised demand holding that the activities of the appellant are classifiable under “sale of space or time for advertisement service” as defined under Section 65 (105) (zzzm) of the Act and not under “Renting of immovable property service” as defined under 65 (105) (zzzz), and exemption is not available on sale of space or time for advertisement services as same is not covered under the list of approved/authorized services. We observe that the present show cause notice was issued for period 2014-15 i.e. for the negative list regime where classification based levy ceased to exist. Thus, demand was proposed, confirmed and upheld by involing/examining obsolete provisions and even without refering to Section 65B (44) of the Act. Finally, we observed that the adjudicating authority has acknowledged the impugned activity to have been covered under the negative list. However, the date of coming into effect is taken from 01.10.2014 whereas clause (g) of Section 66D w.e.f. 01.07.2012 itself reads as follows:
“Selling of space or time slot for advertisement other than advertisements broadcast by radio or television.”
In the present case, It is not the advertisement broadcast by radio or television, hence the exemption from payment of service tax for the impugned activity of appellant is otherwise available w.e.f. 01.07.2012.
In the light of the entire above discussion that the findings of the adjudicating authority below are held contrary to the position of statute (SEZ Act and Rules). The adjudicating authority has failed to observe the judicial discipline by ignoring the previous decisions in appellant’s own case. Even department itself has dropped the demand on same demand which has not been considered in the present case. In light of entire above discussion, the order under challenge stands set aside. Consequent thereto, the appeal stands allowed.
[Order pronounced in the open Court on 12.07.2024]