2026 (1) TMI 855 - SC - Service Tax

Contracts for booking speakers held not to constitute 'event management' service for tax purposes; appeal allowed

Whether contracts for booking speakers amounted to 'event management service' under Section 65(105)(zu) of the Finance Act (pre-1.7.2012): SC held that ... Levy of service tax - Event Management Service - Fee paid by the appellant to the personalities/speakers, through their booking agents - applicability of reverse charge mechanism - invocation of extended period of limitation with interest and penalty - period of demand between October, 2009 and March, 2012. Scheme of taxability - HELD THAT:- It is not in dispute that during such period prior to 1.7.2012, the Service Tax was leviable only on the positive list of services as enumerated in Section 65(105) of Chapter V of the Finance Act. If the services strictly fall within such list, then they are taxable and if not, then no tax can be imposed on such service - The expressions “event management” and “event manager” respectively occurring in Section 65(105)(zu) are defined under Section 65(40) and Section 65(41) of the Finance Act respectively - The impugned levy of Service Tax can be sustained only if the service in question falls within the four corners of “event management” by an “event manager”. Whether the provision covers the service in question? - HELD THAT:- The entire submission of the revenue focuses on the aspect as to whether a “principal-agent” relationship is established between the speaker and the booking agent. However, we are of the view that this is wholly irrelevant for the present controversy. The issue is not whether the relationship between the speaker and the booking agent is that of “principal-agent” or not. The issue is whether the contract constitutes “event management service”. As discussed, the contract is for booking of speaker and not for event management and therefore, the levy of tax on such contract under the category of “Event Management Service” should fail. The further argument of the revenue that, without the speaker the event would be devoid of any significance and therefore, the service in question is an “Event Management Service”, also deserves to be rejected. That the presence of the speaker is essential for the event cannot be disputed. However, whether the service of the speaker or the agent on behalf of the speaker can be considered to be “event management service” is altogether a different issue. The speaker does not plan, promote, organize or present the event. Thus, the speaker, is neither an “event manager” nor does he provide an “event management service”. Principle of strict interpretation of taxing statute well established - HELD THAT:- The principle of strict interpretation of a taxing statute, particularly in the context of charging provisions, is well established - reference made to the recent decision in the case of Shiv Steels v. State of Assam [2025 (9) TMI 993 - SC ORDER] wherein this Court observed 'In construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of law. If the revenue satisfies the court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter.' Circular dated 8.8.2002 also supports the assessee - HELD THAT:- The reliance placed by the assessee on Circular dated 8.8.2002 is also well founded - what is sought to be covered is the service of management or organizing of the event, and the revenue cannot be allowed to stretch the application of such a clause beyond its contours. Levy fails even on application of common parlance test - HELD THAT:- What is stated in the circular is also the common parlance understanding of “event management”. The common parlance test has been applied by this Court for determining classification under sales tax statutes on various occasions. While deciding whether “charcoal” would be included in “coal” it was observed by this Court in the case of Commissioner of Sales Tax v. Jaswant Singh Charan Singh [1967 (2) TMI 65 - SUPREME COURT] where it was held that 'A sales tax statute, being one levying a tax on goods, must, in the absence of a technical term or a term of science or art, be presumed to have used an ordinary term as coal according to the meaning ascribed to it in common parlance. Viewed from that angle both a merchant dealing in coal and a consumer wanting to purchase it would regard coal not in its geological sense but in the sense as ordinarily understood and would include “charcoal” in the term “coal”.' Even if this test of interpretation of sales tax statutes is applied for interpreting the clause for imposing Service Tax, the contract in question cannot be considered to be commonly understood as that of event management. The expressions ‘event management’ and ‘event managers’ is commonly understood in the sense of appointing someone to manage or organize the event. Individual contract for booking of persons required for participation in the event are not commonly understood as “event management” contracts. The impugned judgment and order passed by the Tribunal is hereby set aside - appeal allowed. Issues: Whether fees paid by the appellant to foreign speakers through booking agents for the Summit are taxable under the reverse charge mechanism as 'Event Management Service' within Sections 65(40), 65(41) and 65(105)(zu) of the Finance Act, 1994 for the period October 2009 to March 2012.Analysis: The Court examined the statutory definitions and scheme applicable during the disputed period when Service Tax applied only to the positive list of taxable services. Relevant provisions considered include Section 66, Section 66A, Section 65(40), Section 65(41), Section 65(105)(zu), Section 65A and Section 73 of the Finance Act, 1994. The Court analysed the contracts and declarations on record and contrasted the defined scope of 'event management' and the role of an 'event manager' with the nature of services rendered by the booking agents, which consisted of procuring and booking speakers and detailing travel, accommodation and appearance commitments. The Court applied the principle that taxing statutes must be strictly construed and applied the common parlance understanding of 'event management' (as reflected in the CBIC Circular dated 08.08.2002), concluding that event management encompasses planning, promotion, organising or presentation of an event in the sense of managing or organising the event, and does not extend to individual contracts for booking participants. The Court distinguished International Merchandising Company LLC on facts, finding the speakers and their appearances integral to the Summit such that the contracts were for booking speakers, not for managing the event.Conclusion: The fees paid to the speakers through booking agents do not fall within the statutory definition of 'Event Management Service' under Sections 65(40), 65(41) and 65(105)(zu) of the Finance Act, 1994; the appeals are allowed in favour of the assessee and the Tribunal's order affirming the demand under the category of Event Management Service is set aside.