No Service Tax on CII for Facilitating Members’ Participation in Overseas Business Exhibitions for a Fee: CESTAT [Read Order]

The New Delhi Principal Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the Confederation of Indian Industry (CII) is not liable to pay service tax on the facilitation of member participation in overseas business exhibitions by receiving a fee from the members. The Tribunal ruled that such activity does not fall within the ambit of “business exhibition service.”

CII is an industry organisation which purchases space in overseas exhibitions for its members and facilitates their participation upon receiving payments from them.

The proceedings stemmed from two show cause notices issued in April 2008 and April 2009. These notices were initially adjudicated in 2009, and upon appeal, the matter was remanded by the Tribunal in 2016 with specific directions.

In the remand proceedings, the adjudicating authority confirmed a service tax of ₹1,81,25,408 levied on the basis of “overseas business exhibition” under the category of “business exhibition service” along with other demands. The present appeal has been filed against this levy.

Arun Kumar Singh, counsel for the appellant argued that it was not the organiser of the business exhibitions but merely acted as a facilitator for its members’ participation and therefore could not be taxed under the definition of “business exhibition service.” It was submitted that the Adjudicating authority conspicuously avoided the Cox and King India Limited versus Commissioner of Service Tax (2014) judgment, as directed by the Tribunal in remand order.

Counsel for the revenue stated that the appellant had been providing Business Exhibition Services since 10.09.2004, and began paying service tax from January 2006 in respect of domestic exhibitions only but had not paid service tax in respect of income earned in organizing Overseas Trade Fair.

It was contended that since both, the service provider and the service receiver were located in India, service tax would be payable on the amounts received under the head "Business Exhibition Services".

The Bench of Binu Tamta, Member (Judicial) and Hemambika R. Priya, Member (Technical) examined the nature of the activity undertaken by CII and noted that they did not organize the exhibitions but were only facilitating participation by securing space for its members in exhibitions conducted abroad.

The Bench referenced the mutuality principle laid down by the Supreme Court in State of West Bengal versus Calcutta Club (2019) where it was emphasised that no distinct service provider-receiver relationship exists in mutual set ups. Consequently, associations such as the appellant render “self service‟ to its members.

Accordingly, the Tribunal held that such facilitation would not amount to rendering “business exhibition service” and set aside the demand raised on this count. The appeal was accordingly allowed to that extent, granting relief to CII from the service tax liability on overseas exhibition facilitation activities.

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