Whether the Event Management services provided to any International Organization under sub-contract also exempt from service tax?

PJ/Case Law/2013-14/1838

Case:- BELLSET ENTERTAINMENT PVT. LTD. Vs COMMR. F SERVICE TAX, DELHI

Citation:- 2013 (32) S.T.R. 47 (Tri. – Del.)

Brief Facts:- The appellant is a registered Service Tax provider under the category of the Event management and were discharging their service tax liability accordingly. The dispute relates to two agreements entered into between them and M/s. Lintas India Pvt. Ltd. and M/s. Rural Communication Marketing Pvt. Ltd. The demand confirmed in respect of service tax provided to M/s. Lintas India (P) Ltd. is to the extent of Rs. 4,80,148/-. It is seen that M/s. Lintas entered into an agreement with UNICEF for providing of services and further passed on the contract to the appellant. As such, the appellant’s contentions are that these services stand provided to M/s. UNICEF, though there is a party in between i.e. M/s. Lintas. The services provided to UNICEF are exempted in terms of Notification No. 16/2002-S.T., which exempt the services provided to the United Nations or an International Organizations. Revenue has not extended the benefit of the said notification to the appellant on the ground that the services do not stand provided by them directly but they have provided the services to M/s. Lintas who had further provided the said services to M/s. UNICEF.

Appellant’s contentions:-The appellant contended that they had not provided a part of the services as a sub-contractor to M/s. Lintas but the entire event relating to “save girl child” stands managed by them and as such, it can be reasonably concluded that the services were provided by them to UNICEF even though the agreement was not between the appellant and UNICEF but was between M/s. Lintas India (P) Ltd. and M/s. UNICEF.

Respondent’s contentions:- The respondent’s contentions were that the benefits of Notification No. 16/2002-S.T. could not be extended to the appellant as the services do not stand provided by them directly to M/s. UNICEF but have provided services to M/s. Lintas who had further provided the said services to M/s. UNICEF.

Reasoning of Judgment:-The bench confirmed that the demand stood confirm on the ground that the appellant had provided part of the services to M/s. Rural Communication Marketing Pvt. Ltd. The appellant had taken a categorical stand before the authorities below that M/s. Rural Communication Pvt. Ltd. had paid the service tax on the entire value of the services provided by them to clients. As such the confirmation of the service tax in respect of the part of services being provided by the appellant to M/s. Rural Communications Pvt. Ltd. would amount to double taxation. The said plea of the appellant did not stand rebutted by the lower authorities. Inasmuch as M/s. Rural Communication Marketing Pvt. Ltd. had paid the entire service on full value of the services, the Bench at the prima facie stage agreed with the appellant that the confirmation of the service tax for the second time was not to be called for.

Apart from the merits of the case, it was noted that the demand stood raised by invoking extended period of limitation. The appellant was admittedly discharging the service on the Event management services being provided by them and ST-3 returns being filed. The lower authorities had not produced any evidence on record to show that the appellant was not including the value of the disputed services in their services in ST-3 Returns with any mala fide intend. Non-inclusion of value on account of bona fide belief cannot be held as sufficient ground for invocation of extended period. It was noted that the issue involved was of technical nature and required legal interpretation. Inasmuch as the entire service tax demand was being paid by M/s. Rural Communication Marketing Pvt. Ltd. The service were being provided to UNICEF in the second case and as such could lead to a bona fide belief on the part of the assessee to entertain a view that no further service tax was required to be paid by them. As such on limitation also, favour with the appellant was found.

The stay application was consequently allowed.

Decision:-The stay petition was allowed.

Comment:- The stay application was allowed solely on the premise that as the service tax liability was discharged by the main contractor, demanding service tax again from the sub-contractor would tantamount to double taxation. Moreover, extended period was also found to be non-invokable in the present case.

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PJ/Case Law/2013-14/1838

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