The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi recently clarified that no service tax is leviable on the delegation fee charged for admission to seminars related to the alcohol industry since they cannot be deemed to be a convention service under Section 65(105) of the Finance Act, 1994.
The judgment was delivered by CESTAT while hearing a Service Tax Appeal filed by All India Distillers Association (AIDA) against the Commissioner, Service Tax – Delhi assailing an order–in-appeal by which the Respondent Commissioner confirmed a Service Tax demand of Rs.28,23,620 against AIDA.
AIDA is an association of members involved in the business of distillation of alcohol and other liquors, and is registered with the Service Tax Department under the category of Club or Association Services covered under Section 65 (105) (zzze) of the Finance Act 1994.
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Individuals/entities interested to join AIDA are required to pay admission/affiliation or membership fees for becoming a member and then become eligible to attend seminars organized by AIDA, for which a ‘delegation fee’ is also received.
The financial records of the Appellant were audited by the Service Tax Department who noted that that the amounts received for ‘Delegation Fee’ for Seminars collected from members during the period from 2007 to 2012, are liable to be covered under Convention Services under Section 65(105), raising a demand of Rs.10,82,057/- against the appellant.
Furthermore, a demand of Rs.12,12,961/- was confirmed under the category of Club or Association services on other activities such as Tour receipts, Circular income, Contribution from Newsletter, Advertisement Income and Sale of Publication. Thereafter, three more show cause notices were issued for the subsequent periods i.e., 2012-13 to 2014-15. The matter was dropped by the adjudicating authority but upheld by the Commissioner (Appeals) in the appellate stage.
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Atul Kumar Gupta and Varun Gaba, appearing for AIDA submitted that that the Commissioner (Appeals) had erred in interpreting the definition of ‘convention services’ and imposed service tax on persons who provide space and ancillary services to hold the convention.
The two-member Bench of Dr. Rachna Gupta, Member (Judicial) and Hemambika R. Priya, Member (Technical) noted that the primary question to be answered was whether the activity conducted by the Appellant was a convention service and taxable.
Observing the principle of mutuality, the Bench observed that AIDA is an association of members and the services undertaken by AIDA is for the benefit of their members only, hence no service tax may be levied on service to oneself.
The Bench further referenced the decision of the Chandigarh CESTAT in M/s CII vs Commissioner, Chandigarh (2023) which held that that “when meetings/seminars are held for the Members, the charging of delegation fee is not exigible to service tax as the activity is squarely covered by the principle of mutuality.“
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