Having failed to get details from the municipal corporation (MC), pertaining to the sale of space for advertising in the city for levying of service tax, office of the commissioner of the central excise, in a letter written to the civic body, has asked it to furnish details at the earliest.
In a letter written to assistant commissioner of the civic body on August 7, the Central Excise Department stated that they had vide two letters written in December, 2008, and May 2009, asked the civic body to supply specific figures relating to amounts received from various sources regarding the sale of space for advertising from May 1, 2006, onwards, so that service tax could be levied on the MC. However, instead of supplying the requisite data, the MC provided them with the correspondence between both the departments.
Sources said in its plea, the MC wrote that they only allowed advertisers to use land belonging to the civic body, subject to the payment of user charges as is chargeable under the Punjab Municipal Corporation Act, 1976. Reacting to this, the excise department stated that though the MC had written that advertisers permit their sponsoring companies to display advertisements on the licensed sites, the advertisers were liable to pay the tax. But, as the MC is the competent authority under the service tax law, tax can be levied upon it.
The letter further stated, "It is again brought to the notice of the civic body that advertising services provided by any advertising agency are liable to pay service tax with effect from November 1, 1996."
Sources said as the MC had allotted space to advertisers to display advertisements, it was liable to pay the tax with effect from May 1, 2006. In the letter, the department states that the document should be treated as most urgent and required information should be provided to it. Meanwhile, sources said as the civic body had to pay the whopping amount to the department, they were reluctant to provide adequate information to them.
However, on the other hand, excise officials said, "If they do not get the required inputs from the civic body, they would initiate strict action regarding it."