CA Vishrut Shah

Definition of Amusement Facility :-

As per Section 65B(9) of the Finance Act, 1994 Amusement Facility is defined as below –

“A facility where fun or recreation is provided by means of rides, gaming devices or bowling alleys in amusement parks, amusement arcades, water parks, theme parks or such other places but does not include a place within such facility where other services are provided.”

Position from 16/08/2002 to 01/07/2012 :-

As per the Notification issued on 16.08.2002 vide Notification No. 08/2002 – ST dated 01.08.2002 for the category “Event Management Service”. The said service was made taxable w.e.f. 16.08.2002.

The term “event management” was defined under section 65(40) of the Finance Act, 1994 as below:

Any services provided in relation to planning, promotion, organizing or presentation of any arts entertainment, business, sports, marriage or any other event and include any consultations provided in this regard.

Thus, an important point to be taken into consideration is that only services in relation to planning, promotion, organizing or presentation is taxable and not any other service.

Thus, the amount paid for getting an access to these amusement facilities are still not taxable on account that said services are not covered in above definition.

Position from 01/07/2012 to 31/05/2015 :-

From 1st July, 2012 on introduction of the negative list-based taxation regime, all services become taxable except few identified under negative list as clearly defined under Section 66D of Finance Act,1994.

As per the Section 66D(j) of Finance Act,1994 –

“Admission to entertainment event or access to amusement facility shall not be considered as Services”

For better understanding, the said entry is divided into two parts, and is analysed in the following manner:

  •    Admission to entertainment events
  • Access to amusement facilities

Thus, the amount paid for getting an access to these amusement facilities were still not attracting Service Tax by way of inclusion in Negative by Government.

Position from 01/06/2015 :-

Finance Ministry by enacting Section 109(4) of Finance Act,2015 has omitted clause (j) of Section 66D of Finance Act,1994 and levy Applicability of Service tax on access to amusement facility by issuing Notification No. 14/2015 dated 19th May,2015. By going through the same now following two activities shall attract service tax at full rate in force namely,

  •    Admission to entertainment events
  • Access to amusement facilities

[However in case of Admission to entertainment events by virtue of Notification No. 06/2015 dated 1st March, 2015 to be effective from the 1st June, 2015 as notified by Notification No. 16/2015-ST dated May 19, 2015.

By amending in the Mega Exemption List of Services effective from June 1, 2015 they have specifically included in clause 47 that

Services by way of right to admission to,-

(i) exhibition of cinematographic film, circus, dance, or theatrical performance including drama or ballet;

(ii) recognised sporting event;

(iii) award function, concert, pageant, musical performance or any sporting event other than a recognised sporting event, where the consideration for admission is not more than Rs 500 per person

This means that any service provided in relation to above below Rs. 500/- shall not attract Service Tax Liability thereon]

Rational of levy of Service Tax :-

Access to amusement facilities was  not covered under the scope of service tax till 31st May,2015 was mainly due to the reasons that entertainment duty falls in the State List i.e. only the State Governments can impose any kind of tax on them as per the Entry No. 62 of List II of Schedule VII of Constitution.

However, given the recent Supreme Court judgment in M/S Tata Sky Ltd vs State Of M.P. And Ors (2013) 4 SCC 656 that imposition of service tax on entertainments provided by Direct to Home (DTH) service providers do not conflict with state list and therefore, they are constitutionally valid. As per Entry No. 92C of List I of Schedule VII of Constitution it enables Union to levy tax on any kind of Services.

This judgement has given space for the central government to impose tax by Section 109(4) of Finance Act,2015 on entertainment services & entry to amusement facilities by applying ‘aspects theory’.

Aspects Theory is defined as

Aspect doctrine merely deals with legislative competence. Subjects which in one aspect and for one purpose fall within the power of a particular legislature may in another aspect and for another purpose fall within another legislative power. These might be overlapping; but the over lapping muse be in line with Law. In said cases the transaction may involve two or more taxable events in its different aspects. But the fact remains that these overlapping does not detract from the distinctiveness of the aspects.

This theory holds constitutionally valid by Apex court in the case of [All India Federation of Tax Practitioners v. Union of India 2007 -TMI – 1556 – (Supreme Court) & BSNL Ltd vs. UOI [2006] 3 STT 245 (SC)].

Implication of these Amendment :-

From 1st June,2015 onwards any entry fees charges for access to amusement facilities shall have to comply with following requirements

a) Registration under Service Tax for Access to Amusement Facility Services

The Major questions still not clarified by the department that under which services an assessee need to get them registered as said services as per the nature itself do not get covered under any specific Services as list down by the Department.

Hence as per the views of author same need to get registered under code of Service profile No. 120 (Services not covered under 1190 list of services)

b) Discharge of Payment liability of Service Tax

With effect from 1st June,2015 these service shall attract Service Tax at the rate of 14% and Assessee owning said facility need to pay to the same to the Government on due dates applicable to them.

c) Return of Service Tax

Assesses liable to pay service tax shall also need to file periodical returns under service tax as prescribed by the government.

(Author can be reached at  +91-9824798534 or on [email protected])

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May 2021