Musical Event Service Tax

[george thomas]

Dear Sir

We are conducting a musical entertainment event to promote our brand and appoint one party for selling Ticket by paying commission. In this regard we want to know any service tax liability is there for us for the amount collected from Ticket Sales. Please help

[KASTURI SETHI]

Sh.George Thomas Ji,

Your service is covered under the erstwhile category of, "Services of Promotion or Marketing of Brand of Goods/Services etc." specified under erstwhile Section 65(105)(zzzzq) (Now under Other Than Negative List). Second party who sells tickets on commission basis is covered under the erstwhile category of BAS specified under erstwhile Section 65(105)(zzb) (now Other Than Negative List).

 

[Rajagopalan Ranganathan]

Sir,

Under Sl. No.3 of Notification No. 30/2012-ST dated 20.06.2012 as amended (with effect from 01.07.2012) only in respect of sponsorship service provided by any individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons, located in the taxable territory to a business entity registered as body corporate, located in the taxable territory, service tax is payable on reverse charge mechanism by the service receiver, that is, a business entity registered as body corporate, located in the taxable territory.

In your case you are allotting the service of selling the tickets to a third party on commission basis. Therefore in my view service tax is payable by the party to whom you have entrusted the sale of tickets and the service provided by the party who sells the tickets on commission basis will fall either under Business Auxiliary Service or Business Support Service both of them fall under service other than included in the Negative List with effect from 01.07.2012.

[MADAN RAHEJA]

In terms of Section 65B(44) of Finance Act, 1994 “service” means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include ----.

Further, Section 66B of Act ibid provides for charge of service tax on and after Finance Act, 2012. wherein service tax is levied at the rate of fourteen per cent. on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed. --- .

Thus in your case service is being provided for consideration by the person who has been appointed by you for selling tickets. Since, this service is not covered under negative list, service tax liability, if any, is on that person who is providing service to you. Further, since service being provided is not covered under reverse charge as per Notification No. 30/2012-S.T., dated 20-6-2012, as amended, no service tax is payable by you under reverse charge mechanism also on activity of ticket sale.

[Akash Deep]

Dear Sir,

Personal views only

What i understood from the exact language of your query is that you are promoting your own brand by organizing a musical event. as you are promoting your own brand its kind of self service. no one can provide service to oneself. to cover under definition of service after 1.7.2012 ad prior to that also, there has to two parties one service provider and other service receiver. I dont see any case of sponsorship services or service of promotion of brand or marketing of brand/ services here.

Second thing what i understood (i may be wrong here) is that you also want to know about the service tax liability on the amount collected by you through sale of tickets. No doubt you have appointed a person to sale ticket on your behalf and you pay him commission.

Here two services are involved. First is service provided by you to the persons who shall participate in musical event after purchasing ticket from the person by you. Here it may be noted that person appointed by you is acting as your agent and is been authorised only to sell tickets. As the tickets are issued by you it is you who is authorisiring the valid holders of the ticket to participate in musical event conducted by you. in other words you are providing services to these persons by way of admission to entertainment event (entertainment event includes musical event). consideration received by you for this service would be the amount collected by you thorough your agent from sale of tickets. Second service is service provided by the person to you who is selling your tickets on commission basis.

Now in this case place of provision of service shall be determined as per Rule 6 of the POP rules, as per Rule 6 place of provision of service shall be the location where the event actually reading of Rule 6 provides that place of provision of services by way of admission to entertainment event and of services anciliary to such admission shall be location where event actually held. serices provided by the person to whom you have appointed to sale tickets on your behalf on commission basis is ancilliary to the services of admission provided by you to the ticket holders. so if the even is actually held outside the taxable territory there shall be no tax liability on the amount collected thorugh sale of tickets and on the commission paid by you to the person who sold your ticket.

However, if the event is held in taxable territory. place of provision of both the services i.e. service provided by you to ticket holders and service received by you may be taxable.

Prior to 1.6.2015 services by way of admission to entertainment event (defined under 65B (24) and includes musical performances) was under negative list as entry (j) of section 66D. so if the event has taken place prior to 1.6.2015 there shall be no tax liability on the services provided by you. In other words no need to pay tax on amount collected through sale of tickets. As such entry (j) of section 66D does not cover ancilliary services to admission to entertainment event, services received by you shall be taxable but in that case ( if you have not imported services of other person) liability to pay tax shall be on the service provider.

On and after 1.6.2015 entry (j) of section 66D was omitted. However, benefit was given, with a restrictive scope) by way of exemption by adding a new entry (entry 47) in N No. 25/2012 dated 20.6.2012 w.e.f 1.6.2015. the relevant of entry 47 of the 25/2012 is as under:

"Services by way of right to admission to,

(i)....

(ii).....

(iii) award function, concert, pageants, musical performance..................., where the consideration for admission is not more than ₹ 500 per person.

so if the price of single ticket is not more than ₹ 500 and event has taken place after 1.6.2015, the services provided by you is exempted from levy of service tax. in other words, no need to pay tax on the amount collected through sale of ticket if event is held after 1.6.2015 and price of a single ticket is less than 500 or ₹ 500.

Services provided by other person to you by selling ticket on your behalf on commission shall be taxable as they were prior to 1.6.2015.

Regards

Akash Deep

[KASTURI SETHI]

Sh.Akash Deep Ji,

I have gone through your comprehensive reply and I agree with you in toto. It has further raised cross query in my mind i.e. any celebrity who will perform musical event in this case for promotion of brand will have to pay ST under the erstwhile category of "Services of Promotion or Marketing of Brand of Goods/Services etc." (Now Other Than Negative List" Do you agree ? Pl. comment upon.

[KASTURI SETHI]

Dear Sh.Akash Deep, Expert,

Thanks for your comprehensive reply dated 27.2.16. This has enriched my knowledge. This is a difference between an Advocate and non-Advocate (I am non-advocate).

[KASTURI SETHI]

Sh.Akash Deep, Expert,

Reply posted by you on 27.2.16 is par excellence. I have saved this in my computer and placed it on desktop as ready reckoner. Fantastic reply. Thanks a lot.

[Akash Deep]

Dear sir, thanks for your appreciation. that day i refer myself as an advocate only to convey the fact to the Querists that i have a business and to run that business and to keep advising here i need money. but it appears that no body seems to take note of that. hahahahhaha. Any way thanks again, i am happy whatever time have devoted is relevant and usefull for you.

Regards

Akash Deep

[KASTURI SETHI]

Sh.Akash Deep, Expert,

Rightly said. I like your nature, knowledge, interpretation of law and drafting very much. One should always be thankful to a person from whom one learns which is useful not only for profession but otherwise also. .I never hesitate to admit whenever I am on a wrong footing regarding reply (posted by me) to a query. If I do not admit my mistake how will I learn more. Undoubtedly, at the same time one must try one's best not to commit mistake. I am talking about myself only. Thanks again.

AI Summary

Admission to entertainment events: exemption applies where ticket price is below specified threshold; ticket-selling agent's service remains taxable. Admission to a musical event is a service of the organiser to ticket-holders and is taxable if the place of provision is within the taxable territory unless a specified ticket-price exemption applies; the appointed ticket-seller on commission supplies a separate ancillary/service (agent) which is taxable and whose liability ordinarily rests on the provider. Place of provision is the location of the event; if outside the taxable territory no tax arises. Reverse charge is applicable only as explicitly provided by notification and does not generally make the organiser liable for commissioned ticket-sale services.