The Supreme Court held that fees paid to foreign booking agents for securing speakers at a summit do not constitute Event Management Service under the Finance Act, 1994. The Court set aside CESTAT’s order, clarifying such contracts are distinct.
NEW DELHI: The Supreme Court of India has ruled that fees paid to international booking agents for securing speakers at a summit do not fall under the category of “Event Management Service” as defined in the Finance Act of 1994.
The Bench, consisting of Justice J.B. Pardiwala and Justice K.V. Viswanathan, overturned the order by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), asserting that contracts specifically for booking individuals to participate in an event are not typically categorized as event management contracts.
The Court ruled in favor of the appellant, determining that the act of booking speakers does not equate to the planning, promoting, organizing, or presenting of an event.
Factual Background of the Case
HT Media Limited organizes the annual “Hindustan Times Leadership Summit.” To facilitate the attendance of notable speakers from abroad, HT Media entered contracts with booking agents such as the Washington Speakers Bureau and the Harry Walker Agency. These agents coordinated appearances by figures like Mr. Tony Blair, Mr. Jerry Linenger, and Mr. Al Gore.
The Revenue Department issued show cause notices suggesting Service Tax on fees paid to these booking agents under the “Event Management Service” category. Although the Adjudicating Authority confirmed the demand and invoked an extended limitation period, the CESTAT subsequently set aside the extended limitation but upheld the demand for the standard period, maintaining that HT Media was liable for Service Tax classified as “Event Management Service.”
Arguments of Parties
Counsel for HT Media(Appellant), Mr. Ashok Dhingra, contended that the Tribunal’s support of the demand was erroneous. He argued that:
- The agents functioned solely as “lecture booking agents” and did not offer event management services to HT Media.
- Section 65(105)(zu) necessitates that the service provider must be an “Event Manager” involved in planning, promoting, organizing, or presenting an event.
- Relying on the TRU Circular dated August 8, 2002, it was emphasized that an Event Manager’s responsibilities encompass venue management, decoration, sound, lighting, security, and publicity—all tasks the booking agents did not perform. The agents provided no consultancy related to the summit.
Mr. V. Chandrashekara Bharathi, representing the Revenue, defended the tax demand by arguing that:
- The speakers are essential to the summit’s significance; thus, by ensuring their participation, the booking agents provided services relevant to the planning, promotion, organizing, or presentation of the summit.
- Consequently, these agents operated as “Event Managers” and were liable for tax under Section 65(105)(zu).
Legal Questions Involved:
“Whether the fees HT Media Limited paid to various personalities and speakers via their booking agents were subject to Service Tax under the reverse charge mechanism classified as “Event Management Service,” as outlined in Sections 65(40) and 65(41) in conjunction with Section 65(105)(zu) of the Finance Act?”
Analysis of the Court
The Supreme Court scrutinized the definitions of “Event Manager” under Section 65(41) and “Event Management” under Section 65(40) of the Finance Act. It observed that the agreements were specifically aimed at booking particular speakers and covering logistics such as travel, lodging, and speech schedules.
- Nature of Services:
The Bench stated,
“The tenor of the contracts and the declaration given by the agents clearly indicate that the services rendered by such agents to the assessee were in the nature of booking the speakers for the event to be organized by the assessee… Such services cannot be equated with ‘event management service’ which has been statutorily defined to mean ‘any service provided in relation to planning, promotion, organizing or presentation of any arts, entertainment, business, sports, marriage or any other event and includes any consultation provided in this regard.’”
- Distinction Between Participation and Management:
Responding to the Revenue’s claim that the speakers are central to the event, the Court clarified:
“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… 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.”
- Strict Interpretation of Taxing Statutes:
Citing the ruling in Shiv Steels v. State of Assam (2025), the Court reinforced the principle of strict interpretation regarding tax statutes.
The court said,
“If… the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy.”
- Common Parlance Test:
The Court applied the “common parlance test,” noting that in everyday language, “event management” implies appointing someone to oversee or organize the entire event.
The court relied on “Commissioner of Sales Tax v. Jaswant Singh Charan Singh” where the court decided whether “charcoal” would be included in “coal” and observed that,
“the test that would be applied is what would be the meaning which persons dealing with coal and consumers purchasing it as fuel would give to that word. A sales tax statute, being one levying a tax on goods, must, in the absence of a technical term or a term of science or art, be presumed to have used an ordinary term as coal according to the meaning ascribed to it in common parlance.”
The Court concluded,
“Individual contract for booking of persons required for participation in the event are not commonly understood as ‘event management’ contracts.”
Final Decision
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 Supreme Court ruled in favor of the appeals and annulled the Tribunal’s contested judgment, ultimately deciding that the fees paid to the speakers through booking agents are not subject to Service Tax under the “Event Management Service” category.
Case Title: HT Media Limited Vs Principal Commissioner Delhi South Goods AND Service Tax
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