Supreme Court Quashes ₹60 Lakh Service Tax Demand On HT Media

Supreme Court Quashes ₹60 Lakh Service Tax Demand On HT Media

Introduction

In a landmark decision concerning the scope of “Event Management Service” under the Finance Act, 1994, the Supreme Court held that payments made to international booking agencies for securing global speakers at a media summit do not attract Service Tax under the category of event management services. The Court set aside the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which had upheld a tax demand of over ₹60 lakhs against HT Media Limited.

Factual Background

HT Media Limited organized its annual “Hindustan Times Leadership Summit,” featuring prominent international personalities such as former UK Prime Minister Tony Blair, former US Vice President Al Gore, and astronaut Jerry Linenger. For securing these speakers, the company entered into contracts with professional international lecture booking agencies, including the Washington Speakers Bureau and the Harry Walker Agency.

The dispute pertained to the period between October 2009 and March 2012. The Revenue Department contended that payments made to the booking agencies constituted taxable services under Section 65(105)(zu) of the Finance Act, 1994, which covers services provided by an “event manager.” According to the Department, securing speakers was integral to planning and organizing the summit and thus fell within the ambit of event management services.

The Tribunal upheld the demand for Service Tax, leading HT Media to file an appeal before the Supreme Court.

Procedural Background

Aggrieved by the CESTAT’s order confirming the Service Tax demand, HT Media approached the Supreme Court. The appeal was heard by a Bench comprising Justice J.B. Pardiwala and Justice K.V. Viswanathan. The principal issue before the Court was whether the services rendered by international booking agencies in arranging the participation of speakers could be classified as “event management services” under the statutory definition.

Issues

1. Whether payments made to international booking agencies for securing speakers at an event fall within the definition of “Event Management Service” under the Finance Act, 1994.

2. Whether booking of speakers can be equated with planning, promotion, organizing, or presentation of an event.

Contentions of the Parties

HT Media contended that its contracts with booking agencies were limited to securing the presence of specific speakers and did not involve management, planning, or organization of the event itself. It was argued that neither the speakers nor the booking agents undertook any responsibility for organizing or conducting the summit.

The Revenue Department argued that the participation of high-profile speakers was integral to the event and therefore the services rendered in securing such participation constituted event management services liable to Service Tax.

Reasoning and Analysis

The judgment authored by Justice Pardiwala carefully examined the statutory definition of “event management service,” which encompasses services provided in relation to planning, promotion, organizing, or presentation of events. The Court observed that the tenor of the contracts and declarations given by the booking agents clearly indicated that their role was confined to booking speakers for the summit.

The Court held that the booking agents acted merely as representatives negotiating the modalities and consideration for the speakers’ visits. Neither the speakers nor the agencies were involved in planning, promoting, organizing, or presenting the event. The participation of a speaker in an event cannot be equated with management of the event itself.

The Court emphasized that the Revenue cannot stretch the scope of the statutory definition beyond its contours. The essence of “event management service” lies in managing or organizing the event as a whole, not in facilitating participation through individual contracts. The Tribunal and the Revenue, according to the Court, committed a fundamental error in conflating participation with management.

The Bench reiterated that tax statutes must be interpreted strictly and that the taxable category cannot be expanded by inference or implication.

Decision

The Supreme Court allowed the appeal and set aside the CESTAT order. The Service Tax demand of over Rs.60 lakhs against HT Media Limited was quashed. The Court held that contracts for booking global speakers through agencies do not constitute “event management services” and are therefore not liable to Service Tax under the Finance Act, 1994.