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TMI BlogTAXATION OF COMMERCIAL USE/ EXPLOITATION OF EVENTS SERVICESX X X X Extracts X X X X X X X X Extracts X X X X ..... TAXATION OF COMMERCIAL USE/ EXPLOITATION OF EVENTS SERVICES - By: - Dr. Sanjiv Agarwal - Service Tax - Dated:- 11-5-2010 - - Service tax has been imposed on the services of permitting commercial use or exploitation of events organized by a person or an organization by the Finance Act, 2010 with effect from a notified date. The gross amount or consideration received by the person or organiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation who permits the commercial use of event share be liable to be taxed to service tax. Meaning of Commercial Use or Exploitation of Event This expression has not been defined by the Finance Act, 2010 but the term has to be understood and applied in its generic sense. It covers in its scope the right or permission to use any event for furtherance of business or commerce granted by the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson who organises such event. The organization of event is an independent activity but a right or permission granted to use (cover, telecast , broad cast, display etc) for a consideration makes it a commercial use or exploitation of such event. The event can be any event including any event in relation to- (i) Art (eg art exhibition) (ii) Entertainment (eg, music concerts) (iii) Busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (eg product launch, inauguration etc) (iv) Sports (eg, cricket match) (v) Marriage (eg, marriage of celebrity, film stars etc) According to TRU Letter No 334/1/2010- TRU dated 26.2.2010 , like intellectual property rights, there are certain personal rights such as, right to privacy, easement right, right to secrecy. With expansion in the field of information technology and broadcasting se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor, many individuals or organizations offer to share/part with these rights for a consideration. A corporate sponsored cricket match or company sponsored music concert; film award events; celebrities' marriages; beauty contests are some of such private functions, which a large number of viewers like to see on TV or media. In such cases, companies, broadcasting agencies and video producers are gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven right to capture these events or programmes for their commercial exploitation in future. Such rights are covered under commercial use/ exploitation of events. Meaning of Taxable Services Taxable service has been defined under section 65(105) (zzzzr) as under- Any service provided or to be provided to any person, by any other person, by granting the right or by permitting commercial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use or exploitation of any event including an event relating to art, entertainment, business, sports or marriage organised by such other person. The taxable service should satisfy the following conditions- (a) service can be provided in relation to any event. (b) service should be of granting the right or permitting commercial use or exploitation of event by other person. (c) Events could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be any event including those relating to art, entertainment, business, sports or marriage etc. (d) Personal use of events is excluded (e) Consideration must be paid for such commercial use or exploitation. The taxable service shall exclude from its scope - (a) personal use of events (b) broadcasting services (c) sponsorship services What is sought to be taxed under commercial use / ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exploitation of events other than broadcasting services are the events which are used for public viewing after paying a consideration for commercial promotion or advantages. The right are given to capture the event or programmes for their commercial exploitation- live or in future. Some examples of taxable service covered can be cited as follows- * BCCI granting broadcasting right to TV chann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el for live telecast or the telecast of highlights . * Shoiab Malik - Sania Mirza's wedding broadcasting right being sold. * Allowing telecast of marriages of celebrities and film stars on a TV channel for a consideration. * Magazines offering consideration to publish exclusive interviews / photographs / wedding pictures. * TV rights to cover music concerts, awards nites etc. Value of T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axable Service The value of taxable service shall be the amount received by the person or organization, who permits the recording and broadcasting of the event from the broadcaster, or any other person who seeks to commercially use or exploit the said event. Cenvat Credit Since the service recipient would be using the service for commercial purpose, the cenvat credit of service tax paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would generally be available to the recipient of the service. Person Liable Any person or organization granting the right or permission for commercial use or exploitation of any event of such person or organization shall be the person liable to pay service tax. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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