The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the Income received by Smaaash from bowling covered under Section 66D(j) of the Finance Act, 1994, and thereby holding that service tax is not leviable.
The impugned order passed by the Commissioner has confirmed the demand holding that only the activity of admission to entertainment events or access to amusement facilities is covered under section 66D(j) of the Finance Act. Charges collected for any other activity would not be covered under the said entry. Since the appellant was not charging any entry/admission fee for entering the Centre, income earned from bowling alley would not be covered under section 66D(j) of the Finance Act as such income pertained to an activity other than ‘access to amusement facilities’.
The counsels for the appellant has contended that the understanding of the department is incorrect to the extent it has disallowed the appellant from being covered under the scope of section 66D(j) of the Finance Act since it provides services other than amusement activities at the Centre. The definition of ‘amusement facility’ does not disqualify a facility from being covered under its scope only because services other than fun or recreation are provided in any part or place of such facility. The definition only excludes such other places from the scope of amusement facility, which means that charges recovered for access to the excluded premises would continue to be taxable.
The authorized representative appearing for the department, however, supported the impugned order and submitted that the contention of the appellant that during the disputed period service relating to ‘admission of entertainment events or access to amusement facilities’ was included under the Negative List of services provided under section 66D(j) of the Finance Act is incorrect as the service provided by the appellant does not qualify to be ‘amusement facility’ defined under section 65B(9) of the Finance Act.
A Two-Member Bench comprising Justice Dilip Gupta, President and PV Subba Rao, Technical Member observed that “It has to be held that the income received by the appellant from bowling alley would be covered under section 66D(j) of the Finance Act and, therefore, would not be leviable to service tax.”
The Tribunal further added that a bowling alley is understood as a facility where the sport of bowling is played. It needs to be remembered that no one ‘plays bowling alley’. One only plays in the bowling alley. Thus, a person is charged to have access to a bowling alley to play the sport of bowling. In a bowling arcade, amount is charged for entering the bowling premises. Once such entry fee or access charge is paid, the customer is free to bowl in the available alley.
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