2019 (1) TMI 71 - AT - Service Tax

Liability of service tax - amount collected as entry fee - period June 2015 to July 2016 - benefit of Notification No. 25/2012 - Held that - The entry fee levied to the above referred activities are exempt from payment of duty. It can be seen from clause (iii) that it contains an entry to any sporting event other than a recognised sporting event, which would include any sporting event conducted other than recognised sporting event. It may be seen that appellant is conducting various sporting activity within the area in his premises which would definitely fall out of the definition of recognised sporting event . Other clauses of notification only defines recognised sporting event and Sl No 47 also exempts sporting event other than recognised sporting event. Both the lower authorities have missed this point in the notification which has been claimed by the appellant right from the beginning. It is nobody s case that the activity undertaken in the premises is a sporting activity as has been recorded by the lower authorities - both the lower authorities have mis-construed Entry No. 47 to deny the appellant exemption from service tax liability on the amounts charges by him which are less than ₹ 500/- as required under Notification. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Demand of service tax on entry fee collected by the appellant post 01.06.2015 under Notification No. 25/2012-ST.

Detailed Analysis:

Issue 1: Service Tax Liability on Entry Fee
The appellant provided amusement facilities in a family entertainment center complex, exempt from service tax under Section 66 D of the Finance Act 1994 until 01.06.2015. The Revenue claimed service tax liability post 01.06.2015 due to the omission of the exemption. The demand was raised for an amount of ?36,32,267/- along with penalties under Sections 78 and 77. The appellant contested the show-cause notice on merits and limitation. The adjudicating authority confirmed the demands and penalties, which was upheld by the 1st Appellate Authority, albeit with reduced tax liability considering the cum tax benefit plea.

Issue 2: Interpretation of Exemption Notification No. 25/2012-ST
The appellant argued that the income taxed was from sporting events conducted in the premises known as the fun factory, which included various activities like Air hockey, basket ball-crazy shoot, and others. They contended that post 01.06.2015, service tax was incorrectly demanded as they charged only ?20 as an admission fee, covered by Entry No. 47 of Notification No. 25/2012-ST. The appellant relied on Tribunal judgments to support that double taxation is impermissible and service tax is leviable only on the service component, not simultaneously with sales tax.

Issue 3: Application of Exemption Clause
The Revenue argued that the appellant was liable to pay service tax on the entry fee collected post 01.06.2015 as admission to entertainment events became taxable. They contended that the exemption under Sl No 47 of Notification No. 25/2012 did not apply to the appellant as fun factory was not considered a recognised sporting event. The appellant's activity was deemed different from a sporting event.

Conclusion:
The Tribunal analyzed the exemption under Sl No 47 of Notification No. 25/2012-ST, which exempts entry fees for various activities. It was noted that the appellant conducted sporting activities falling outside the definition of a recognised sporting event. The lower authorities had misinterpreted the notification, denying the appellant exemption from service tax liability. Consequently, the appeal was allowed, setting aside the impugned order. The Bench did not record findings on other submissions due to the disposal of the appeals on merits.