EVENT MANAGEMENT SERVICES

[Mr. M. GOVINDARAJAN]

     Event Management Service was introduced by the Finance Act, 2002 ('Act' for short).   Sec. 65(105) (zu) defines the taxable service of event management as a taxable service provided or to be provided to a client, by an even manager in relation to event management.

     Sec.65 (40) of the Act defines 'event management' as any service provided in relation to planning, promotion, organizing or presentation of any arts, entertainment, business, sports, marriage or any other event and includes any consultation provided in this regard.

     Sec.65 (41) of the Act defines 'event manager' as any person who is engaged in providing any service in relation to event management in any manner.

     In the instruction letter No. B11/1/2002-TRU, dated 01.08.2002 issued by the Department the role of an Event Manager is discussed.  An event manager is hired to execute an event such as product launch of any corporate, promotional activities, concerts/rock show, official meets, award functions, beauty pageants, entertainment events, exhibitions, private functions, sport events etc.,   Event Manager uses his expertise and ideas to manage an event.   He is supposed to manage a venue, sets including decoration of sets, mandap, chair, table, barricades, sound, light video, electrical, security, communication, invitations to the event/sale of tickets and publicity of the event.  He has also to manage the stage show, artist, musician, choreographers and other miscellaneous items for holding of event.  All services provided by the event manager are liable to service tax.  The consultation services for organizing an event, provided by the Event Manager are also liable to service tax.

     Another clarification issued in the said instruction is as to the valuation of the services rendered by an Event Manager.   For managing an event, the Event Manager hires the services of photographer, videographer, sound recording studio, advertising agency, mandap keeper and security agency.   Service tax is already leviable on the amount paid to these agencies by the Event Manager.  The gross amount charged by the Event Manager from the client for organizing the event is liable to be included in the value of the taxable service for the purpose of calculation of service tax.

     It is further clarified that in a case where the event is organized/managed by the sponsor himself, no service tax is payable as 'Event Management'.  Where revenue is generated by renting out the exhibition space and sale of ticket, service tax under the category of event management is not liable on the sale proceeds of tickets or revenue generated from the sale of space.

     Circular No. 68/17.2003-ST, dated 28.11.2003 clarified that the service tax is not on the event but on the services provided on managing an event. 

     The following are some of the case laws decided by the tribunals:

1.      Tiger Sports Marketing (P) Limited V. Commissioner of Service Tax, New Delhi - 2008 -TMI - 30574 - CESTAT, NEW DELHI

Appellants have taken service tax registration as 'Event Manager' and paid tax on the gross amount received from Sponsors minus prize money, Pro-Am prize money, entry fees - Revenue demand tax on the gross amount received including entry fees, prize money & Pro-Am prize money - service provided by the Appellants to the companies sponsoring the tournament, is similar to 'Sponsorship service' which became taxable only w.e.f. 18/04/06 - demand under Event Management Service is not justified

2.      Kiran Soans V. Commissioner of Service Tax, Bangalore - 2007 (8) STR 179 (Tri.Bangalore)

In terms of the definition of 'Event Management' appearing in Sec. 65(40), 65(41) and 65(105) promoting business on the road, cannot be considered as Event Management.

3.      Commissioner of Central Excise, Siliguri V. Mahabir International - 2008 -TMI - 2789 - CESTAT, KOLKATA

The appellant being charitable trust, enjoyed tax exemption under Income Tax law as its object was carrying out charitable activities and public utility services for no profit.  It had arranged a Yoga Shibir at Siliguri for a week from 1.12.2004 to 07.12.2004 and that was conducted by Swamy Ram Dev of Divya Yoga Mandir Trust.   Such an event was not event management and no consideration was received towards the yoga camp.   The entire money received was given to the trust of Swami Ramdev and nothing was received from Divya Yoga Mandir Trust.   It being only a charitable institution it had supported a noble cause and in absence of gross value received for any commercial service that is not liable to service tax.

The tribunal held that there was no evidence brought by Revenue to prove its allegation that the respondent has realized from Divya Yoga Mandir Trust in relation to the event management.   In absence of any evidence proving that the appellant had carried out a commercial activity of event management they cannot be taxed.

4.      Hindustan Zinc Limited V. Commissioner of Central Excise, Jaipur - II - 2008 (9) STR 213 (Tri. Del)

The appellant, a manufacturer availed event management services to celebrant plant expansion.   Service tax paid and credit availed for the same.   The Revenue disputed the availing of credit.  Credit was denied by Commissioner (Appeals) treating the activity of celebration as an entertainment.   The tribunal held that prima facie case not made out by the appellant and directed to pre deposit the service tax and waived penalty.

5.      Opus Media Entertainment V. Commissioner of Central Excise, Jaipur - 2008 -TMI - 2921 - CESTAT, NEW DELHI

The appellants are engaged in the event management and business auxiliary services.  On being pointed out the appellant deposited the short payment of tax with interest.   By considering the fact that there could be a bona fide dispute about the actual value of services, the Assistant Commissioner did not impose any penalty in terms of Sec. 80 of the Act.   The Commissioner reviewed the said order and imposed penalties.

The tribunal held that there was confusion about the service tax on various services, during the relevant period and the discretion exercised by the Assistant Commissioner cannot be faulted upon.   The Commissioner, in his order, did not find that there was a deliberate short payment of tax with intention to evade payment of duty.   The appellants paid the tax with interest before issuing of show cause notice.   The tribunal set aside the impugned order.