Supreme Court order Whether fees paid by HT Media Ltd to foreign speakers through booking agents for the “HT Leadership Summit” (Oct 2009–Mar 2012) were taxable under reverse charge as “Event Management Service
The Supreme Court in HT Media Limited Vs Principal Commissioner Delhi South Goods and Service Tax held that fees paid for booking foreign speakers for a leadership summit are not taxable as “event management service” under the Finance Act, 1994. Allowing the appeals, the Court set aside the Tribunal’s demand, ruling that the contracts in question were limited to securing speakers and fixing visit-related modalities such as speech duration and interactions, and did not involve planning, promotion, organisation, or presentation of the event. The Court rejected the Revenue’s contention that the indispensability of speakers converts their participation into event management, clarifying that participation in an event is distinct from managing it. Neither the speakers nor the booking agents acted as event managers; agents merely represented speakers for contractual arrangements. Emphasising strict interpretation of taxing statutes and the CBIC TRU Circular dated 08.08.2002, the Court held that the charging entry must squarely cover the activity, which it did not. Applying commercial parlance tests, the service was not commonly understood as event management. The ruling has interpretative relevance under GST as well.
Key Issue:
Whether fees paid by HT Media Ltd to foreign speakers through booking agents for the “Hindustan Times Leadership Summit” (Oct 2009–Mar 2012) were taxable under reverse charge as “Event Management Service” under Sections 65(40), 65(41) & 65(105)(zu) of the Finance Act, 1994.
Held:
The Supreme Court allowed the appeals and set aside CESTAT’s order confirming demand for the normal period. The contracts were only for booking speakers, fixing modalities of visit, speech duration, media interaction etc., and not for planning/promotion/organising/presentation of the event. 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”. Similarly, the booking agent who merely books the speaker also acts in the capacity of an agent or representative for agreeing to the terms of the speakers’ presence at the event. Participation in the event cannot be considered as management of the event. This precisely is the fundamental error committed by the revenue as well as by the Tribunal while imposing Service Tax on the service in question under the category of “event management service”. Hence, the service does not fall within “event management”. The Court held that the Revenue’s focus on principal–agent relationship was irrelevant; the determinative test is whether the activity fits within the charging entry. Applying strict interpretation of taxing statutes and the CBIC TRU Circular dated 08.08.2002, the levy failed.
Similarly, while deciding whether clinical syringes could be considered as “glassware” or not, this Court observed in the case of Indo International Industries v. Commissioner of Sales Tax reported in (1981) 2 SCC 528 as under:
“It is true that the dictionary meaning of the expression “glassware” is “articles made of glass” (see Webster’s New World Dictionary). However, in commercial sense glassware would never comprise articles like clinical syringes, thermometers, lactometers and the like which have specialized significance and utility. In popular or commercial parlance a general merchant dealing in “glassware” does not ordinarily deal in articles like clinical syringes, thermometers, lactometers, etc., which articles though made of glass, are normally available in medical stores or with the manufacturers thereof like the assessee. It is equally unlikely that a consumer would ask for such articles from a glassware shop. In popular sense when one talks of glassware such specialised articles like clinical syringes, thermometers, lactometers and the like do not come up to one’s mind.
Applying the aforesaid test, therefore, we are clearly of the view that the clinical syringes which the assessee manufactures and sells cannot be considered as “glassware” falling within entry 39 of the First Schedule to the Act.”
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 ratio of this judgement is that Speaker booking ≠ event management; participation in an event is not management of an event. This judgement will be relevant for the GST law from the point of interpretation.
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