By TIOL News Service

HYDERABAD, JAN 11, 2019: THE appellants are having an amusement facility providing fun or recreation by means of rides, gaming devices and bowling alleys in the amusement part located in family entertainment centre complex which were exempt from payment of service tax in terms of Section 66D of the FA, 1994 as they were covered under the negative list. [(j) admission to entertainment events or access to amusement facilities; refers]

However, the said entry in the negative list was omitted (by Finance Act, 2015) and with effect from 01.06.2015 by Notification No. 14/2015-ST and as a consequence service tax liability arises, is the claim of the revenue.

A demand notice seeking recovery of service tax of Rs.36.32 lakhs came to be issued invoking the extended period and was confirmed by the original authority.

The Commissioner(A) upheld this order but reduced tax liability by considering the plea of cum tax benefit.

The appellant is before the CESTAT.

It is submitted that the sporting events premises is called as fun factory; that as per S.B. Sarkar's Words and Phrases the term 'sport' inter alia includes amusements, diversion, fun, pastime, running, jumping, throwing discus, playing for amusement especially as a past time of children, a competitive activity involving skill, chance or endurance played according to the rules, jest and fun. It is further submitted that post 01.06.2015 demand has been raised which is incorrect as the appellant is charging only Rs 20/- as admission fee which is not disputed and is covered by the Entry No 47 of Notification No 25/2012-ST. Moreover, appellant is paying entertainment tax and wherever state tax is paid, service tax liability does not arise is the law; that double taxation is impermissible. Lanco Infratech Ltd -   2015-TIOL-768-CESTAT-BANG-LB  &  Grand Ashok -  2009-TIOL-635-CESTAT-BANG  refers].

The AR justified the demand and also submitted that exemption under notification 25/2012-ST is not available as it is very clear that the said Sl No 47 is talking about the recognised sporting event or musical performance and the definition of recognised sporting event is given in clause 2(zab) of the notification; that amusement is different from ‘entertainment event' and fun factory is not a ‘sporting event'.

The Entry 47 and clause 2(zab) of notification 25/2012-ST as inserted by notification 6/2015-ST dated 01.03.2015 (w.e.f 01.06.2015) are reproduced below -

47. 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.

(zab) "recognised sporting event" means any sporting event,-

(i) organised by a recognised sports body where the participating team or individual represent any district, state, zone or country;

(ii) covered under entry 11.

The Bench considered the submissions and after examining the cited entry 47 and the clause 2(zab) observed thus -

++ It can be seen from clause (iii) that it contains an entry to any sporting event other than a recognised sporting event, which would include any sporting event conducted other than recognised sporting event. It may be seen that appellant is conducting various sporting activity within the area in his premises which would definitely fall out of the definition of "recognised sporting event".

++ It may be seen that other clause only defines recognised sporting event and Sl No 47 also exempts sporting event other than recognised sporting event. Both the lower authorities have missed this point in the notification which has been claimed by the appellant right from the beginning.

++ It is nobody's case that the activity undertaken in the premises is a sporting activity as has been recorded by the lower authorities. In my view, both the lower authorities have mis-construed Entry No. 47 to deny the appellant exemption from service tax liability on the amounts charged by him which are less than Rs 500/- as required under Notification.

The impugned order was set aside and the appeal was allowed.

(See 2019-TIOL-123-CESTAT-HYD)