2020 (3) TMI 753 - AT - Service Tax

Appeal Granted in Tax Dispute: Charges for Event Goods Taxable

M/s. Stage 3 ACE Eventz Private Ltd. Versus The Commissioner of Service Tax, Chennai

The Tribunal partially allowed the appeal by setting aside the penalties imposed but upheld the confirmation of the demand and interest. It was determined ... Short payment of service tax - Event Management Service - service tax on the amounts collected on the equipments / goods used for providing Event Management Services not paid - demand of short paid duty alongwith the interest and penalties - HELD THAT:- Event Management service includes even the consultation provided in this regard. In the present case, the appellant rendered services like organizing events of Rock shows, Corporate shows, Marriages, Promotions etc. They collected charges for conduct of the events and also provided certain equipments / goods required to conduct the event. The appellant entered into separate contract with the customer for providing the goods needed for the event and collected charges in the nature of rent. These charges are nothing but expenses for rendering event management service and should form part of taxable value for paying service. This is because without the use of such equipments / goods the appellants would not be able to conduct the event. The charges collected in the nature of rent from the customer can only be considered as expenses for providing the event management services. Merely because the appellant bifurcated the contract as Event Management Service and for hiring of goods, it cannot be concluded that the charges paid for use of the goods do not fall within Event management Services. It is true that supply of Tangible Goods Services are taxable w.e.f. 16.5.2008. In the present case, the contracts are artificially bifurcated so as to exclude the charges incurred in use of the goods for providing Event Management Services which is not permissible. The demand confirmed along with interest in the impugned order does not require any interference - the penalty is set aside invoking Section 80 of the Act - Appeal allowed in part. Issues:Demand confirmed under Event Management ServicesAnalysis:The case involved the appellant providing Event Management Services and not discharging service tax on the entire consideration received. The department initiated investigations, and after due process of law, the original authority confirmed the demand along with interest and penalties. The appellant argued that the consideration received for the supply of tangible goods should be taxed under the category of Supply of Tangible Goods Service, not Event Management Service. They contended that the absence of registration under the Supply of Tangible Goods Service category meant the demand was not subject to service tax. The appellant also provided evidence of separate arrangements for conducting events and supplying goods, arguing that the consideration received for the supply of goods should not be taxed under Event Management Service. They cited legal precedents to support their arguments.The respondent, on the other hand, supported the findings in the impugned order, stating that the goods provided for organizing events should be considered part of the gross amount charged to the customer for Event Management Service. They argued that even if separate contracts were entered for providing goods, those charges were expenses for providing the event management service and should be included in the taxable value for service tax payment. The respondent referred to the definition of Event Management Services and highlighted that the appellant collected charges for providing equipment used for events but did not discharge service tax on the entire consideration received.After hearing both sides, the Tribunal analyzed the issue and concluded that the charges collected for providing goods used in event management were indeed expenses for rendering the service and should be included in the taxable value for service tax payment. The Tribunal found that even though the Supply of Tangible Goods Services became taxable from a specific date, the appellant had artificially bifurcated contracts to exclude charges related to goods used for Event Management Services. The Tribunal dismissed the appellant's reliance on legal precedents that were deemed irrelevant to the case at hand. Ultimately, the demand confirmed under Event Management Services was upheld, but the penalties imposed were set aside invoking Section 80 of the Act.In summary, the Tribunal partially allowed the appeal by modifying the impugned order to set aside the penalties imposed without affecting the confirmation of the demand or interest. The decision was based on the understanding that charges for providing goods used in event management should be considered part of the taxable value for service tax payment, regardless of how the contracts were structured.