2026-VIL-992-CESTAT-HYD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Classification of service - Support Service vs. Renting of Immovable Property Service - Service Tax liability on licensing of Railway Space for advertisement – Respondent is engaged in providing advertisement services through hoardings and billboards obtained space from railways under license agreements by tender process and paid license fees for the right to display advertisements at railway stations – Demand of service tax under Reverse Charge contending that railways were providing Business Support Services - The adjudicating authority dropped the proceedings holding that the activity does not constitute support service but falls under renting of immovable property service – HELD - The definition of support service under section 65B(49) contemplates outsourcing of functions that entities ordinarily carry out themselves. For an activity to qualify as support service including advertisement and promotion, the service provider must be ordinarily engaged in such activity but may obtain it through outsourcing - In the present factual matrix, there is no evidence that railways were engaged in carrying out advertisement or promotion activities that they subsequently outsourced to the respondent. The agreements do not categorically state that railways would provide support services; rather, they clearly indicate the letting out of specified demarcated space for installation of hoardings and display of advertisements - Once it is established that railways as service provider are not providing support services, the service tax, if any, would be payable on forward charge basis and not under RCM - The alternative classification of the activity as renting of immovable property service is correct, as railways provided specified demarcated space to the respondent for putting up hoardings and billboards against payment of license fee, which falls squarely within the definition of renting of immovable property service – Further, invocation of extended period was not tenable as there was no statutory requirement to declare services received not under RCM in service tax returns, and therefore non-declaration of license fees would not constitute suppression of material facts - The demand of service tax is not sustainable as the activity does not constitute support service but falls under renting of immovable property service which is payable on forward charge basis. The proceedings initiated are rightly dropped – The Revenue appeal is dismissed
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