Summary
The Supreme Court held that fees paid by HT Media through foreign booking agents to secure speakers for its Leadership Summit were not taxable as 'event management service' under Section 65(105)(zu) of the Finance Act, 1994, because the contracts were for booking speakers, not for planning, promoting, organising or presenting the event; the CESTAT order confirming the demand was set aside.
Issues
- Whether fees paid to foreign speakers through booking agents for the Hindustan Times Leadership Summit were liable to Service Tax under reverse charge as 'event management service' under Sections 65(40), 65(41) and 65(105)(zu) of the Finance Act, 1994 for October 2009 to March 2012.
- Whether the service should instead be classified as manpower recruitment or supply agency service following International Merchandising Company LLC.
Provisions considered
- Section 65(105)(zu), Finance Act, 1994The only taxable entry invoked; the levy could be sustained only if the service was event management rendered by an event manager, which it was not. (¶¶ 27, 34, 36, 39, 40)
- Section 65(40), Finance Act, 1994'Event management' means service in relation to planning, promotion, organising or presentation of an event; booking a speaker for the Summit did not fall within it. (¶¶ 26, 35, 39, 41)
- Section 65(41), Finance Act, 1994Neither the speaker nor the booking agent who merely books the speaker plans, promotes, organises or presents the event, so neither is an 'event manager'. (¶¶ 25, 35, 41)
- Section 65(68) and Section 65(105)(k), Finance Act, 1994Considered in the appellant's alternative argument that the service was manpower supply; the Court rejected that classification argument, distinguishing International Merchandising Company LLC. (¶¶ 29, 30, 45)
- Section 65A, Finance Act, 1994Quoted as the classification rule for services under the positive list regime before 01.07.2012, under which a service must fall in a specific sub-clause of Section 65(105). (¶¶ 24, 45)
Held
- Before 01.07.2012 Service Tax was leviable only on services falling strictly within the positive list in Section 65(105); a levy under clause (zu) could stand only if the service fell within the four corners of 'event management' rendered by an 'event manager'. (¶¶ 31, 33, 36)
- The contracts and the agents' declarations showed that the agents' service was booking particular speakers for the Summit, covering travel, accommodation, schedule and the speakers' commitments; booking a speaker is not management of an event. (¶¶ 37, 38, 39)
- Whether a principal-agent relationship existed between the speaker and the booking agent was irrelevant; the only issue was whether the contract was one for event management service. (¶ 40)
- That a speaker's presence is essential to the event does not make the speaker's or the booking agent's service event management; participation in an event is not management of it, and the Revenue and Tribunal erred in holding otherwise. (¶ 41)
- Charging provisions of a taxing statute are construed strictly; no tax can be imposed by inference or analogy, and the Revenue cannot stretch the event management entry beyond its contours, which the TRU Circular dated 08.08.2002 also confines to managing or organising an event. (¶¶ 42, 43, 44)
- On the common parlance test, event management is understood as appointing someone to manage or organise an event, and individual contracts for booking participants are not so understood. (¶¶ 46, 47, 48)
- The appellant's alternative plea that the service was manpower supply under International Merchandising Company LLC was rejected, as that case concerned a personality whose appearance was ancillary to the main event, unlike the speakers here. (¶ 45)
Result
Appeals allowed; CESTAT judgment dated 31.08.2017 set aside.