Online Ticketing Platform, Is Not Receiving Any Consideration From Card Companies; Hence, No Service Tax Is Payable: CESTAT

Online Ticketing Platform, Is Not Receiving Any Consideration From Card Companies; Hence, No Service Tax Is Payable: CESTAT

The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has ruled that the online ticketing platform under the aegis of BookMyShow is not receiving any consideration from card companies; therefore, no service tax is required to be paid.

The bench, comprising Anil G. Shakkarwar (technical member) and Dr. Suvendu Kumar Pati (judicial member), noted that, according to the agreement, card companies were obligated to reimburse the appellant for all amounts offered to customers via the ticket booking platform. The appellant had agreements with cinema houses for ticket payments made through their platform. They collected a convenience fee for ticket bookings and paid service tax on them. Records indicate that the appellant did not retain any amount from card companies intended for cinema houses.

The appellant/assessee, registered with Service Tax, offers a range of services, including online ticket booking for movies and other events. Operating through the platform www.bookmyshow.com, the appellant acts as an intermediary, connecting customers seeking tickets with cinema halls and event organizers. Contracts are established with movie houses and event organizers to facilitate this service. To streamline payment processes, the platform interfaces with various banks and payment gateways. Convenience charges, or fees, are levied for online bookings, on which service tax is paid by the appellant. The appellant receives payments comprising ticket costs and convenience fees, remitting the ticket cost to the respective cinema house or event organizer.

The Revenue noted that the appellant was providing its online ticket platform to multiple credit card companies, which incentivize their cardholders with discounts or complimentary tickets. In instances where credit card companies offer such benefits, they cover the variance between the ticket cost and the amount paid by customers for the tickets.

To facilitate card companies offering discounts and free tickets, the appellant has entered into agreements with several card companies, including ICICI Bank. When customers use eligible bank credit cards for purchasing cinema or show tickets, any variance between the payment made by the customer and the amount received by cinema houses is covered by the debit card company, facilitated through the appellant. For this purpose, the appellant issues debit notes to the card companies.

The department observed that the amount collected by the appellant through issuing debit notes to card companies constituted consideration for allowing them to promote their businesses. Consequently, the appellant was deemed to be providing business support services to card companies in this manner. Over the period from the financial year 2010–11 to the financial year 2014–15, the appellant collected approximately Rs. 52.78 crores from card companies. As a result, the appellant was required to pay a service tax of Rs. 6,33,96,482. This service tax was demanded from the appellant through a show cause notice dated October 15, 2015. The appellant contested the show cause notice by asserting that, as per the agreement, it was obligated to collect the actual cost of tickets, which was then collected either from customers or from card companies and subsequently paid to cinema houses.

The agreement explicitly stated that card companies would reimburse the appellant for all amounts utilized as offers by customers. Additionally, it was clarified that the appellant had disbursed these amounts to cinema houses and did not retain any portion for itself from what was paid by the card companies. It was argued that since the consideration was deemed to be nil, the service tax on said consideration should also be nil.

The assessee argued that the department alleged that the appellant was offering business support services to card companies, which in turn provided discounts or free tickets to customers, who were also patrons of the card companies.

The tribunal observed that the allegation in the proceedings was that the appellant had provided business support services to card companies. It was acknowledged in the show cause notice that the appellant was not issuing any invoices to the card companies. According to accounting standards, unless an invoice is issued, consideration is not deemed to be collected. Hence, it is evident from the record that the appellant was not receiving any consideration from card companies.