Taxability of Business Exhibition Services

[Dr. Sanjiv Agarwal]

Service tax has been imposed on business exhibition services rendered by the organizer of a business exhibition by the Finance Act, 2004 with effect from 10th September, 2004. The gross amount charged to or total consideration received from an exhibitor in relation to business exhibition services is chargeable to service tax, i.e. services provided by an organizer of a business exhibition to an exhibitor.

Meaning of Business Exhibition

Section 65(19a) defines business exhibition as under –

“business exhibition” means an exhibition –

(a) to market; or

(b) to promote; or

(c) to advertise; or

(d) to showcase,

any product or service, intended for the growth in business of the producer or provider of such product or service, as the case may be.

The definition covers any exhibition to market or promote or advertise or show case any product or service which is intended for the growth in business of the manufacturer or provider of the product or the services.

The definition of business exhibition leads to following basic conditions for an activity to be called a business exhibition –

(i) it should be an exhibition

(ii) the purpose of such exhibition should be any one or more i.e.

(a) to market,

(b) to promote,

(c) to advertise,

(d) to showcase

(iii) exhibition should be of any product or service.

(iv) exhibition should be intended for growth in business of —

(a) producer of such product

(b) provider of such service

Business exhibition services were hitherto not specifically covered but were subjected to service tax under categories such as advertisement agency, mandap keepers, event management or business auxiliary services. Finance Act, 2004 has covered these services of organizing trade fairs, exhibitions, road shows or any other form which can lead to exhibition. In most of the cases, exhibitions are organized as ‘exhibition cum sale’ which will also be covered.

Business exhibition services must satisfy two conditions- the exhibition must be there and it must relate to business as discussed above. The Act does not define any of these terms and their dictionary or general meanings should be considered. Business means a person’s regular occupation, profession or trade, an activity that someone is engaged in and the practice of making one’s living by engaging in commerce. Exhibition means a public display of items of interest. To market means to explore or develop a demand for the product or service, offer for sale of products or services etc. To promote means to further the progress or growth so as to increase sales or public awareness. To showcase means to display or exhibit something for general or favourable attention. To advertise means to draw attention to or describe a product or service etc. in a public medium in order to promote sales or make the item so advertised known to people. (Source – The New Oxford Dictionary of English)

Taxable Service

Section 65(105)(zzo) defines taxable service as under-

“taxable service means any service provided or to be provided to an exhibitor, by the organizer of a business exhibition, in relation to business exhibition”.

According to The New Oxford Dictionary of English, exhibitor means a person who displays items of interest at an exhibition. An organizer means a person (individual/firm/company/other entity) who organizes an event or in case of an exhibition, organizes an exhibition by providing space, infrastructure such as furniture and fixtures, fittings, cabins, security, electricity and other logistics necessary for an exhibition. Taxable services would include such service when rendered by an organizer to an exhibitor. The purpose should be to hold a business exhibition as defined in Section 65(19a).

To be taxable, business exhibition services should involve two parties – exhibitor and organizer. In house exhibitions by exhibitor themselves will not result in any taxable service. The important conditions for taxability of business exhibition services are –

(i) business exhibition services should be provided by any organizer of such exhibition.

(ii) services should be provided or to be provided to an exhibitor.

(iii) services should be in relation to business exhibition.

While event management service (a currently taxable service) also relates to organizing such events, but in that case, the services are rendered to the organizer by an event manager in relation to planning, promoting, organizing etc. Thus, an organizer of a business exhibition is not covered under Event Management Services, but would be covered under the new levy of ‘’Business Exhibition Services’’. Similarly, while services rendered in relation to a circular, label, documents, hoardings or any other audio visual representation of a product or service falls under “advertisement services’’, the services relating to actual exhibition or display of the product or services would fall under the category of “Business Exhibition Services’’. (Vide Circular No. 80 dated 10-9-2004 (since withdrawn)

In Karnataka Exhibition Authority v. CCE, Bangalore 2009 -TMI - 75221 – (CESTAT, BANGALORE), it was held that land having stalls leased out by tender was not covered under business exhibition services.

In Krishna Industries Agricultural Exhibition Society v. CCE, Guntur 2010 -TMI - 204658 – (CESTAT, BANGALORE), where assessee collected rent form business exhibitors towards hiring of stalls, it was held that such activity is not covered under business exhibition service.

CBEC’s Master Circular No. 96/7/2007 dated 23.8.2007 clarified on overlapping between business exhibition services and event management services [Section 65(105)(zu)] as follows –

041.01 / 23.08.07

Organizers of Trade Fairs and Exhibitions solicit participation from the trade and industry and provide space and other facilities, including furniture, cabins, security, electricity, etc., to display products and provision of services.   Whether services provided by the organizers of trade fairs / exhibitions are covered within the scope of event management service [section 65(105)(zu)]?

Trade fairs and exhibitions are organised by persons. Such organisers of trade fairs and exhibitions provide services to exhibitors in relation to business exhibition. Services provided by an organizer of trade fairs and exhibitions to an exhibitor in relation to business exhibition is liable to service tax under “Business Exhibition Service” [Section 65(105)(zzo)] w.e.f. 10.09.2004.   In addition, an organiser of the trade fair or business exhibition may engage an event manager to provide service to the organiser in relation to organising trade fairs and exhibitions.  In such cases, the event manager renders the service of “Event Management” to the organisers and is liable to pay service tax under “Event Management Service”.   The two services, namely “Business Exhibition Service” and “Event Management Service”, and the two service providers of the respective services are distinct.

Value of Taxable Service

The value of taxable service in relation to business exhibition services provided to any exhibitor by organizer of business exhibition shall be the gross amount charged from that person. Gross amount would mean the gross amount charged without any deduction of expenses incurred in rendering/providing the service and without any abatement from the taxable value.

Specific Exemptions

(i) Services provided in relation to business exhibition of goods by the organizer of exhibition to manufacturer of goods falling under Chapter 570, 61, 62 and 63 of Central Excise Tariff Act, 1985 is exempt subject to certain condition the exemption shall be claimed by the manufacture by way of refund of service tax paid vide Notification No. 43/2007-ST dated 29.11.2007.

(ii) Services rendered to exhibitor participating in exhibition held outsideIndiaare exempt. Taxable services provided by organiser of business exhibition for holding business exhibition outside India is wholly exempt from service tax vide Notification No. 5/2011-ST dated 1.3.2011.

Person Liable

Any person being organizer of a business exhibition shall be liable to pay service tax and shall be treated as an assessee for service tax purposes.

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