2018 (10) TMI 474 - AT - Service Tax

Classification of services - Business Exhibition Service or otherwise - providing of space along with some amenities by the appellant to another department of Government of India for setting up of media centre - whether the appellant is liable to pay service tax under the classification business exhibition service as defined in Section 65(105) (zzo) read with Section 65(19a) of the Finance Act? - Reverse charge mechanism. Held that - The providing of space along with some amenities by the appellant to another department of Government of India for setting up of media centre for the purpose of dissemination of the sports news and telecasting of sports events of the Commonwealth Games, 2010 does not amount to holding of a business exhibition and/or providing of any service under the provisions of Section 65(105)(zzo) read with Section 65(19a) of the Finance Act - Demand alongwith penalties set aside. The appellant was not required to pay any amount of service tax under the head business exhibition service on the amount received by the appellant for setting up media centre for the Commonwealth Games 2010 - the appellant is also not liable to pay any service tax on reverse charge basis, under the facts and circumstances, as they are not rendering any taxable service. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability to pay service tax under the classification business exhibition service as defined in Section 65(105)(zzo) read with Section 65(19a) of the Finance Act.

Analysis:
The appellant, a Government of India Enterprise, organized trade fairs/exhibitions but faced a ban during the Commonwealth Games due to security reasons. The Ministry of Information and Broadcast paid them for setting up a media center, leading to a dispute on service tax liability. The appellant received and utilized funds, leading to a demand notice of ?4,10,40,683 under 'Business Exhibition Service.'

The ld. Commissioner raised three main issues:
(i) Service tax liability on funds received for the media briefing center.
(ii) Taxability of the grant in aid received.
(iii) Taxability of expenditure incurred in foreign currency.

On the first issue, it was found that the funds received were for specific services related to the Commonwealth Games, not falling under business exhibition services. The appellant's payment to ITPO for specific services was not classified as business exhibition services, leading to the setting aside of the tax demand.

The appellant argued against the tax liability under 'business exhibition service' as the conditions precedent were not met. The tribunal agreed, stating that providing space for a media center did not constitute a business exhibition service under the Finance Act. Consequently, the tax demand of ?1,10,40,683 was set aside, and the appellant was not required to pay service tax for setting up the media center.

In conclusion, the tribunal ruled in favor of the appellant, stating they were not liable to pay service tax under the 'business exhibition service' classification for the funds received for the Commonwealth Games media center. Additionally, no tax was payable on a reverse charge basis as the appellant was not providing any taxable service, entitling them to consequential benefits as per the law.