2018 (12) TMI 1035 - AT - Service Tax

Classification of services - Import of service - Business Support Services or event management services? - event organized in Muscat relating to hiring equipment on rent for organizing the event in Muscat - it was alleged that the event organized by the appellant in UK and Muscat on 7.7.2006 and 24.4.2006 respectively was a part of their marketing strategy in promoting the channel and enlarge the subscriber base - reverse charge mechanism. Held that - Undisputedly the appellant had paid the amounts of ₹ 1,36,99,550/- for organizing the events named as ETC/Loomba Trust Bollywood Concert . The amount paid to the overseas providers of said services was alleged by the Revenue to fall under the category of Business Support Service in as much as the services are in the nature of Operational Assistance for Marketing and liable to service tax under reverse charge mechanism under Section 66A of the Finance Act, 1994. The event was organized for the appellant by M/s. Concerto at UK, which involves various stages to make the event successful. The appellant paid service charges for undertaking the event by M/s. Concerto. Neither in the agreement nor in the invoices the object or purpose of the event reveals the role of M/s. Concerto was to promote the business or marketing of the appellant's channel. M/s. Concerto has carried out their job of organizing the event as per the agreement and the outcome of the event, whether increased customer base of the appellant or otherwise, is not their concern. The appellant had not received services under Business Support Services , but the service rendered by M/s. Concerto is correctly classifiable under Even Management Service and since the entire service is performed outside India, hence not taxable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Classification of services as Business Support Services or Event Management Services
- Liability to pay service tax under reverse charge mechanism
- Applicability of penalty under sections 76 & 78
- Limitation period for demanding service tax

Classification of services as Business Support Services or Event Management Services:
The case involved a dispute regarding the classification of services provided by an overseas service provider to the appellant for organizing events in the UK and Muscat. The Revenue alleged that the services fell under "Business Support Service" and were liable to service tax under reverse charge mechanism. However, the appellant argued that the services should be classified as "Event Management Services" and were performed outside India, hence not taxable. The Tribunal analyzed the agreements, invoices, and the nature of services provided by the overseas provider. It was observed that the services were related to organizing events and did not involve operational assistance for marketing the appellant's channel. Therefore, the Tribunal concluded that the services were correctly classifiable under Event Management Services and were not taxable.

Liability to pay service tax under reverse charge mechanism:
The Revenue contended that the services provided by the overseas service provider to the appellant fell under the category of Business Support Services, making the appellant liable to pay service tax under the reverse charge mechanism. However, the Tribunal found that the services were more aligned with Event Management Services based on the nature of the services provided and the agreements between the parties. As a result, the Tribunal ruled that since the services were correctly classified as Event Management Services and performed outside India, the appellant was not liable to pay service tax under the reverse charge mechanism.

Applicability of penalty under sections 76 & 78:
The appellant challenged the penalties imposed under sections 76 & 78, arguing that they were not sustainable in law. The Tribunal did not provide detailed analysis of this issue in the summary provided.

Limitation period for demanding service tax:
The appellant contended that the demand for service tax was barred by limitation since there was no suppression or mis-declaration on their part. The Tribunal did not provide detailed analysis of this issue in the summary provided.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant. The services provided by the overseas service provider were classified as Event Management Services, not falling under Business Support Services, and hence not taxable. The judgment was pronounced on 29/11/2018.