BookMyShow Only Facilitates Ticketing, Not Engaged in Trading Activity: CESTAT Rules Against Revenue [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) Bench at Mumbai, has upheld the Commissioner’s decision dropping the demands raised against Bigtree Entertainment Pvt. Ltd., the operator of BookMyShow.

The Tribunal held that the company merely provides an online ticketing platform and is not involved in trading of cinema or event tickets, ruling that no reversal of CENVAT credit is warranted under Rule 6 of the CENVAT Credit Rules, 2004.

The case concerns Bigtree Entertainment Pvt. Ltd. and arises from the Revenue’s appeal against the Order-in-Original dated 27.05.2016 issued by the Commissioner of Service Tax-VI, Mumbai. The Revenue was represented by Manish Mohan, Commissioner (AR), while the respondent was represented by Aqeel Sheerazi, Advocate, along with Anuj Shah, CharteredAccountant.

Bigtree Entertainment is registered for various taxable services, including Business Auxiliary Service, InformationTechnology Services, and Selling of Space or Time for Advertisement. For the period between April 2010 and March 2014, it provided an online booking platform for cinema and event tickets, collecting the base price on behalf of theatres or event organisers and retaining only the convenience fee and commission, on which it duly discharged service tax.

During an EA-2000 audit, the Department took the view that the company was engaged in “trading” of tickets, asserting that the settlement of ticket proceeds with theatre owners amounted to providing an exempt service, thereby attracting reversal obligations under Rule 6(3). A Show Cause Notice dated 23.10.2015 was issued demanding reversal of CENVAT credit, interest, and penalties.

Rule 6(3) of the CENVAT Credit Rules, 2004 establishes –

“(a) A manufacturer who manufactures two classes of goods, namely :

(i) non-exempted goods removed;

(ii) exempted goods removed; or

(b) a provider of output service who provides two classes of services, namely :

(i) non-exempted services;

(ii) exempted services,

shall follow any one of the following options applicable to him, namely :

(i) pay an amount equal to six per cent of value of the exempted goods and seven per cent of value of the exempted services subject to a maximum of the sum total of opening balance of the credit of input and input services available at the beginning of the period to which the payment relates and the credit of input and input services taken during that period; or

(ii) pay an amount as determined under sub-rule (3A) :

Provided that if any duty of excise is paid on the exempted goods, the same shall be reduced from the amount payable under clause (i) :

Provided further that if any part of the value of a taxable service has been exempted on the condition that no CENVAT credit of inputs and input services, used for providing such taxable service, shall be taken then the amount specified in clause (i) shall be seven per cent. of the value so exempted :

Provided also that in case of transportation of goods or passengers by rail, the amount required to be paid under clause (i) shall be an amount equal to two per cent. of value of the exempted services.”

The Commissioner examined the agreements with theatres and event organisers and observed that the company neither purchased tickets nor controlled inventory. The agreements made it clear that the base ticket price was collected only on behalf of the cinema owner or event organiser and that the respondent retained solely the convenience fee.

The Commissioner held that the activity was a standalone taxable service and not a composite of service plus trading. He further noted that a cinema ticket is not “goods” as settled by the Supreme Court in Sunrise Associates. Temporary retention of money before settlement was held to be a normal commercial incident and not indicative of trading. Accordingly, the proceedings were dropped.

In appeal, the Revenue argued that the respondent promoted the sale of tickets and engaged in activities similar to trading, emphasising that retention of funds reflected a commercial angle that the Commissioner failed to evaluate. It was contended that mere payment of service tax on convenience fees did not address the broader activity of handling ticket proceeds.

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The Tribunal, comprising Justice S.K. Mohanty (Judicial Member) and M.M. Parthiban (Technical Member), carefully examined the Ticketing Agreements with INOX Leisure Ltd. and SUN TV Network Ltd. and concluded that Bigtree Entertainment functioned purely as a booking agent with no right over ticket inventory, pricing, or grant of admission. The entire ticket amount was collected on behalf of the cinema or event organiser and did not form part of the respondent’s revenue.

The Bench held that there was no evidence demonstrating that the company was engaged in trading of tickets. It also observed that entry to cinema or entertainment events was not shown to be a taxable service and that treating such entry as exempt for the purpose of triggering Rule 6 was legally untenable. Since the respondent provided only one taxable service and no exempt service existed, Rule 6(3) had no application.

The Tribunal relied on precedents such as Network Advertising Pvt. Ltd., AVL India Pvt. Ltd., Toyo Engineering India Ltd., and Ballarpur Industries Ltd., reiterating that Rule 6 applies only when multiple services are provided, including at least one exempt service. As this was not the case here, the demand for reversal was held to be unsustainable.

As a result, in an order pronounced on 19.11.2025, CESTAT ultimately dismissed the Revenue’s appeal and upheld the Commissioner’s order dated 27.05.2016, confirming that no reversal of CENVAT credit was required.

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