2026-VIL-1185-CESTAT-CHD-ST
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SERVICE TAX CESTAT Cases

Service Tax liability of Local Bodies for selling of space for advertisement - The Appellant contends that being a sovereign local body, it is not covered under the definition of "person" as per the General Clauses Act, 1897, and therefore, not liable to service tax - Whether a Municipal Corporation being a sovereign local body is covered under the definition of "person" for levying service tax on "Selling of Space for Advertisement" – HELD - During the relevant period from April 2005 to March 2010, the activity of selling space for advertisement was taxable only if a "person" provides service to another "person". Since a Municipal Corporation being a local body is not covered within the term "person" and consequently not covered under the definition of "taxable service", it does not fall under the ambit of service tax - The Tribunal decisions have clearly established that the Government and State bodies are not covered by the term "person" prior to 01.07.2012 - Further, the ld. Commissioner (Appeals) has wrongly held that the amount received by the appellant as ‘Licence fee’ cannot be equated with ‘advertisement tax’ leviable under Sections 90 and 122 of the Municipal Corporation Act. Additionally, the advertisement tax being a statutory levy collected under constitutional authority vested in local bodies cannot be chargeable to service tax - The extended period of limitation invoked by the Respondent is also not sustainable as the issue involves interpretation of law and public undertakings of the State cannot be alleged to have suppressed facts with intent to evade tax – The impugned order is set aside and the appeal is allowed
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