2011 (12) TMI 406 - AT - Service Tax

Appellants registered for paying service tax under the head for Event Management Services - scrutiny of records - demanding tax short paid and proposing penalties - appellants contested that they are not required to pay service tax - eligible for the exemption under Notification 12/2003-ST dated 20-06-2003 Held that - Cost of materials that get consumed in the construction of floats and stalls will get excluded under Notification 12/2003-ST - issue has been decided by the Tribunal in Aggarwal Colour Advance Photo System Vs. CCE (2011 - TMI - 205988 - CESTAT, NEW DELHI (LB) a case where the appellant procures raw materials and make objects necessary for rendering services and uses it for rendering such services - The value of other goods and material, if sold separately would be excluded under exemption Notification No. 12/2003 - directed to deposit Rs.30 lakhs towards duty demand within 12 months from the date of the order against assessee.

Summary

Issues Involved:
1. Service tax liability on "Event Management Services" provided by the appellants.
2. Classification of services under "Event Management Service", "Business Auxiliary Service", or "Business Exhibition Service".
3. Exemption under Notification 12/2003-ST for the value of materials used in providing the service.
4. Invocation of extended period for raising the demand.
5. Requirement of pre-deposit of dues for admission of appeal.

Analysis:

1. Service Tax Liability on "Event Management Services":
The appellants were providing services related to promotion and organization of events for various companies. The Revenue alleged that the appellants had not paid service tax on the gross value received from customers but only on a part of the money received. The issue was whether the services provided fell under the category of "Event Management Service" and whether the appellants were liable to pay tax on the entire value received.

2. Classification of Services:
The appellants argued that their services should be classified under "Business Auxiliary Service" or "Business Exhibition Service" instead of "Event Management Service". The Counsel for the appellants contended that they were eligible for exemption under Notification 12/2003-ST and were liable to pay tax only on the commission received, not on the value of materials reimbursed by their principals.

3. Exemption Under Notification 12/2003-ST:
The dispute centered on whether the cost of materials used in constructing stalls and floats should be excluded under Notification 12/2003-ST. The Tribunal observed that the materials were not merely supplied to the principal but were consumed in providing the service, akin to chemicals used in a photographic service, as per a previous Tribunal decision.

4. Invocation of Extended Period:
The appellants argued against the invocation of the extended period for raising the demand, claiming that the demands were based on audit reports. However, the Tribunal opined that the extended period could be invoked as the appellants had not disclosed the amounts received as reimbursements to the department.

5. Pre-Deposit Requirement for Admission of Appeal:
The Tribunal directed the appellants to deposit a specified amount towards the duty demand confirmed in the order for admission of the appeal. The pre-deposit was required within a specific timeframe, failing which the balance dues would be waived, and there would be a stay on the collection of such amounts during the appeal's pendency.

This detailed analysis of the judgment provides insights into the key issues raised, arguments presented, and the Tribunal's findings on each aspect of the case related to service tax liability, classification of services, exemption under Notification 12/2003-ST, invocation of the extended period, and the pre-deposit requirement for admission of appeal.