The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the demand of service tax on the income received by the Prime Maxi Mall Manager and recorded under the head of income from mall management cannot be subjected to service tax under the head of “business auxiliary service” before 01.05.2006.
The bench of Dr. Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that if the activity of selling space for advertisement had fallen under business auxillary service” before 01.05.2006, they would have been no reason to introduce a separate service of “selling of space for advertisement” service. Since the activity was not covered before, the new service was introduced from 01.05.2006. The department does not dispute the service tax paid by the appellant from 01.05.2006 under the service “selling of space for advertisement”.
The appellant was set up as a company and it changed its name to the present “Prime Maxi Mall Management (P) Ltd” with effect from 11.12.2022. Through its unit, namely, “Ansal Plaza Mall Management Company” the appellant derives it’s major income from selling and licensing business space in common areas of various malls constructed by others.
The income was recorded by the appellant as “income from mall management” for the years 2004-05 and 2005-06. According to the appellant, Ansal is not a separate entity but is a unit of the appellant. The appellant, through Ansal, entered into an agreement with a developer M/s Ansal properties & Industries Limited, Delhi according to which a variety of services were to be provided by the appellant.
However, according to the appellant, it ended up providing only service of “leasing out of space for advertisement/ sales promotion to various customers”. The appellant obtained the right of lease of the space for advertisement from the developer on a consideration of Rs. 1,00,000 per year and, in turn, sold the space to various businesses for consideration.
From 2006, the appellant paid service tax on this service under the category of “selling of space for advertising” which became a taxable service under section 65 (105) (zzzm) with effect from 01.05.2006.
The dispute pertains to the period 01.04.2004 to 30.04.2006 when, according to the departmnet, the services rendered by the appellant were classifiable under the head “business auxiliary service” as defined in section 65 (19) and were taxable under section 65 (105) (zzb) as business auxiliary service.
A show cause notice was issued to the appellant demanding service tax under the head of “business auxiliary service”.
It was stated in the show cause notice that the appellant was responsible for managing the complex, its upkeep in all respects, promoting the shoppers’ traffic, assisting in augmenting the sales of the buyers and tenants of various spaces, act as a liaison agent between the developer and various users of the spaces in the complex, conceptualizing promotion programmes in a coordinated manner, help in increasing shopper’s traffic resulting in increase in sales in the shopping arcade.
The appellant was required to undertake advertising and promotional activities through various media, plan and hold events to attract audiences, bring celebrities, float monthly quarterly newsletters and mail them to potential customers.
Since the appellant had not shown these incomes in it’s service tax returns and they were discovered only on scrutiny of the appellant’s income tax returns and balance sheets, the demand was raised invoking extended period of limitation along with interest and penalties were also proposed in the show cause notice.
The tribunal has held that once the department accepted the activity as the service of selling of space for advertising with effect from 01.05.2006, it can also not say that the service was some other service prior to this date.
Case Details
Case Title: M/S Prime Maxi Mall Manager (P) Ltd Versus Commissioner Of Central Excise- Delhi-Iii, Gurgaon
Case No.: Service Tax Appeal No. 60191 Of 2013
Date: 17/04/2025
Counsel For Appellant: M K Dutta And Rajesh Dutta
Counsel For Respondent: Jaya Kumari
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