2025 (2) TMI 1216 - AT - Service Tax

Classification of services - amount reflected in the balance sheet viz. BCCI fund and advance deposits receipt for cricketing activities TV Subvention money sponsorship subsidy and other receipts match fees and other receipts hire charges and rental - Event Management Service or not - amount received as miscellaneous receipts and sponsorship fee other receipts receipts from clubhouse associate fees and other membership fees clubhouse and other membership fees chamber revenue - Club or Association Service or not. Event Management Service - amount reflected in the balance sheet viz. BCCI fund and advance deposits receipt for cricketing activities TV Subvention money sponsorship subsidy and other receipts match fees and other receipts hire charges and rental - HELD THAT - The event manager is supposed to manage a venue sets including decoration of sets mandap chair table barricades sound light video etc. invitation to the event / sale of tickets and publicity of the event and it is also clearly mentioned that service tax is not on the event but on the services provided for managing an event. In the present case the appellant is allotted with the cricket matches by BCCI on rotation basis to various states including Karnataka. BCCI pays hosting fees to the appellant for conducting such matches and provides ad hoc amounts against the amount due to association. Explaining the difference between the said receipts from BCCI it was argued by the learned senior advocate that hosting fees and ad hoc amount are that in the former case it is match specific and is received after every specific allotted match is conducted whereas the latter is lumpsum ad hoc amount which is granted annually after due scrutiny to various state affiliates. The amount received from BCCI is in the form of reimbursement. On going through the heads of receipts which have been considered by the Commissioner and confirmed to have been received against providing Event Management Services does not explain which events are organised and the amount paid is whether in response to the said events. As rightly pointed out by the learned senior advocate that all along the Department s approach in relation to the service of hosting cricket matches is that the role of the state association is considered to be that of supporting the business of the BCCI and the attempt was to bring the said services rendered by the state associations to BCCI under the scope of taxable services of Business Auxiliary Service and /or Business Support Service . Club or Association Service - amount received as miscellaneous receipts and sponsorship fee other receipts receipts from clubhouse associate fees and other membership fees clubhouse and other membership fees chamber revenue - HELD THAT - The issue is squarely covered by the judgment of the Hon ble Supreme Court in the case of State of West Bengal Vs. Calcutta Club Limited 2019 (10) TMI 160 - SUPREME COURT (LB) where it was held that It is thus clear that companies and cooperative societies which are registered under the respective Acts can certainly be said to be constituted under those Acts. This being the case we accept the argument on behalf of the respondents that incorporated clubs or associations or prior to 1st July 2012 were not included in the Service Tax net. - Thus following the ratio laid down by the Hon ble Supreme Court the amount confirmed against the receipts from the members for providing various services cannot be chargeable to service tax under the category of Club or Association Membership Services . Extended period of limitation - HELD THAT - It is found that the learned senior advocate in the written submissions has vehemently submitted that the appellant has been issued show-cause notices from time to time alleging the activities / services rendered by them would fall under the different taxable categories; therefore alleging suppression of fact and invocation of extended period of limitation also cannot be sustained. The appeal succeeds both on merits as well as on limitation. In the result the impugned order is set aside and the appeal is allowed.

Summary

ISSUES:

Whether the amounts received by a registered society affiliated to a national sports board for conducting cricket matches and related activities fall within the scope of "Event Management Service" under the Finance Act, 1994.Whether the amounts collected as membership fees by the registered society for providing facilities to members are taxable under the category of "Club or Association Membership Services."Whether the doctrine of mutuality exempts the services provided by the registered society to its members from service tax.Whether the extended period of limitation and penalties can be invoked on the ground of suppression of facts when the appellant's activities were periodically scrutinized and show-cause notices issued earlier.

RULINGS / HOLDINGS:

Amounts received by the registered society from the national sports board and others for conducting cricket matches and related activities do not constitute taxable "Event Management Service" as the society is not an event manager and no distinct event management service to a client is established; the receipts are primarily reimbursements or grants to promote sport and not consideration for taxable services.Amounts collected as membership fees by the registered society, which is "established or constituted" under a law, for providing facilities to its members are not taxable under "Club or Association Membership Services" based on the doctrine of mutuality and Supreme Court precedent.The doctrine of mutuality applies to exempt services rendered by the registered society to its members from service tax liability, as held by the Supreme Court in State of West Bengal v. Calcutta Club Limited.The extended period of limitation and penalties cannot be sustained where the appellant's activities were known to the Department through prior scrutiny and show-cause notices, negating any suppression of facts.

RATIONALE:

The Court applied the definitions under the Finance Act, 1994, particularly Sections 65(40) (Event Management Service), 65(41) (Event Manager), and 65(25a) (Club or Association Membership Services), along with Board circulars clarifying the scope of event management services and the distinction between event organizers and event managers.Board Instruction F.No.B11/1/2002-TRU dated 01.08.2002 and Master Circular F.No.96/07/2007-ST dated 23.08.2007 were relied upon to interpret the nature of event management services, emphasizing that service tax is leviable only on services provided by an event manager to a client, not on the event itself or grants/reimbursements received.Precedents from the Tribunal and Supreme Court, including the judgment in State of West Bengal v. Calcutta Club Limited, were followed to affirm that entities "established or constituted" under law are exempt from service tax on membership services due to the doctrine of mutuality.The Court noted prior Tribunal decisions holding that subsidies, grants, and reimbursements received by sports associations from the national sports board are not consideration for taxable services but are aimed at promotion and development of the sport, thus outside the scope of business support or auxiliary services under the Finance Act.The Court rejected the Revenue's characterization of the appellant's role as an event manager, finding that the appellant merely hosts matches allotted by the national sports board and does not engage in planning, promotion, or organization as an independent event manager would.The invocation of extended limitation period and penalties was found unsustainable, as the Department had prior knowledge of the appellant's activities, evidenced by earlier show-cause notices and scrutiny under different taxable categories.