PLACE OF PROVISION OF EVENTS

[Dr. Sanjiv Agarwal]

W.e.f. 01.07.2012, Place of Provision of Services Rules, 2012 are in force which determine the taxability of services based on its territorial location as to service provider or service receiver or place of performance / rendition of service.

The essence of indirect taxation is that a service should be taxed in the jurisdiction of its consumption. This principle is more or less universally applied. In terms of this principle, exports are not charged to tax, as the consumption is elsewhere, and services pay tax on their importation into the taxable territory.

The place of provision of service rules will determine the place where the services shall be deemed to be provided. It's taxability will be determined based on the location of its provision.

Rule 6 of the Place of Provision of Services Rules, 2012, relating to place of provision of services relating to events, provides that "the place of provision of services provided by way of admission to, or organization of a cultural, artistic, sporting, scientific, educational or entertainment event, or a celebration, conference, fair exhibition, or similar events and of services ancillary to such admission, shall be the place where the event is actually held."

Therefore, rule 6 shall cover the following services -

1. Admission service;
2. Organization services;
3. Services ancillary to such admission.

The provision of sound engineering for an artistic event is a prerequisite for that event and treated as a service ancillary to its organization. A service of hiring specific equipment at the venue is an example of an ancillary service to admission.

Services in relation to admission as well as organization of events such as conventions, conferences, exhibitions, fairs, seminars, workshops, weddings, sports and cultural events are covered under this Rule.

Illustration 1

A management school located in USA intends to organize a road show in Mumbai and New Delhi for prospective students. Any service provided by an event manager, or the right to entry (participation fee for prospective students, say) will be taxable in India.

Illustration 2

An Indian fashion design firm hosts a show at Toronto, Canada. The firm receives the services of a Canadian event organizer. The place of provision of this service is the location of the event, which is outside the taxable territory. Any service provided in relation to this event, including the right to entry, will be non-taxable.

However, a service of courier agency used for distribution of entry tickets for an event is a service which cannot be considered as ancillary to admission to an event. Similarly, security services provided to an event will not get covered under event services.