CESTAT Delhi Quashes ₹1.81 Crore Service Tax Demand on CII For Overseas Exhibitions

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that fees collected by the Confederation of Indian Industry (CII) from its members for facilitating participation in overseas business exhibitions are not liable to service tax under the category of “Business Exhibition Service”.

The bench consists of Judicial Member Binu Tamta and Technical Member Hemambika R. Priya, was hearing an appeal filed by Confederation of Indian Industry (appellant) against an order confirming a service tax demand of over Rs. 1.81 crore along with interest and penalties.

CII, a not-for-profit industry body, was facilitating participation of its members in exhibitions held abroad, which were organised by third parties.

The department alleged that CII was providing "Business Exhibition Service" and was liable to pay service tax on the amounts collected from members, especially since payments were received in Indian rupees and both the service provider and the recipient were located in India.

Rejecting this view, the tribunal noted that under Section 65(105)(zzo) of the Finance Act, 1994, service tax on business exhibition applies only where services are provided by an organiser to an exhibitor.

The bench opined that CII was not the organiser of the exhibitions but had merely facilitated participation of its own members.

The Tribunal agreed with the counsel for the appellant that the appellant had merely facilitated the participation of its members in business exhibitions organised abroad by others. There is no evidence led by the department to controvert this submission of the appellant. Consequently, no organiser-exhibitor relationship is established.

The bench held that "the appellant is not liable to pay service tax for charging a fee from its own members for facilitating their participation in overseas exhibition."

Accordingly, the Tribunal set aside the entire demand relating to overseas business exhibitions along with penalties.

On the issue concerning the alleged short payment of service tax based on differences between ST-3 returns (cash basis) and balance sheet figures (accrual basis), the Tribunal noted that adequate verification was required.

As the appellant had not produced sufficient documentary evidence to conclusively establish correct tax payment, this issue was remanded to the adjudicating authority for fresh consideration after granting due opportunity to CII.

Regarding the issue relating to the delayed payment of service tax, the bench stated that, "it has been contended that the service tax was paid on cash receipt basis where as the Balance Sheet was prepared on accrual basis. In this context, we note that the impugned order has noted that the appellant had failed to provide details of the amounts received vis a vis invoices issued. Consequently, the impugned order has gone ahead and confirmed the said demand. We find that no evidence has been led before us by the appellant to establish that the tax was paid correctly."

As a result, the appeal was partially allowed by setting aside the service tax demand on overseas exhibition services, while the balance sheet-related demand was remanded for re-adjudication.

For Appellant: Advocate, Arun Kumar Singh

For Respondent: Authorized Representative, Aejaz Ahmad