Online Ticketing Platform Under Aegis Of BookMyShow Not Receiving Any Consideration From Card Companies, No Service Tax Payable: CESTAT

The Mumbai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the online ticketing platform under the aegis of BookmMyShow is not receiving any consideration from card companies, and no service tax is payable.

The bench of Anil G. Shakkarwar (Technical Member) and Dr. Suvendu Kumar Pati (Judicial Member) has observed that, as per the agreement, card companies were required to reimburse the appellant all the amounts that were being offered by the card companies to their customers through the ticket booking platform. The appellant had entered into agreements with cinema houses for payment of tickets booked through their platform. For booking tickets through their platform, the appellant collected a convenience fee and paid service tax on the same. As per the record, the appellant has not retained any amount to itself that was received from card companies and that was intended to be paid to cinema houses.

The appellant/assessee is registered with Service Tax and provides various services. One of the services provided by the appellant is the facility for customers to book online tickets to movies and other shows. The appellant has provided one online ticketing platform under the aegis of www.bookmyshow.com. The platform has brought together customers who wish to book tickets for movies and other shows, cinema halls, and event holders who wish to sell their tickets. To provide a platform, the appellant has entered into contracts with movie houses and those who organize various events. For the convenience of payments for booking the shows, payment arrangements are also made. The platform is connected with various banks and other payment gateways. For providing the facility of online booking of shows, the appellant collects convenience charges, or convenience fees, and pays service tax on the said convenience fee. The appellant receives an amount towards the ticket cost along with a convenience fee and remits the ticket cost to the cinema house or event holder, as the case may be.

It was observed by Revenue that the appellant was offering their online ticket platform to several credit card companies that promote their cards by allowing discounts or free tickets to customers. When such discounts and free tickets are offered by credit card companies, the difference between the cost of the ticket and the amount collected from the customer against tickets is borne by the card companies.

For the purpose of allowing the card companies to extend offers of discounts and free tickets, the appellant has entered into agreements with various card companies, including ICICI Bank. When the ultimate customer uses an eligible bank's credit card for payment or purchase of cinema or other show tickets, the difference between the payment made by the customer and the payment received by cinema houses is borne by the debit card company and is routed through the appellant, and for the said purpose, the appellant issues debit notes to the card companies.

The department noted that the amount that is collected by the appellant by issuing debit notes to card companies is consideration for allowing card companies to promote their businesses, and in the said manner, the appellant is providing business support services to card companies. During the period from financial year 2010-11 to financial year 2014-15, appellant collected around Rs. 52.78 crores from the card companies, and, therefore, appellant was required to pay a service tax of Rs. 6,33,96,482/- as service tax, and the said service tax was demanded from the appellant through a show cause notice dated October 15, 2015. The appellant contested the show cause notice by stating that, as per the agreement, the appellant was obliged to collect the actual cost of tickets, and the same was collected either from the customers or from the card companies, and the same was paid to cinema houses.

The agreement clearly mentioned that the card companies would reimburse the appellant for all amounts that were being availed of as offers by customers, and it was stated that the appellant had paid the amounts to the cinema houses and did not retain any amount to itself that was paid by the card companies. It was stated that since the consideration was nil, the service tax on the said consideration would also be nil.

The assessee contended that the department has alleged that the appellant was providing business support service to the card companies that were providing discounts or free tickets to customers, and customers were also customers of the card companies.

The tribunal noted that the allegation in the proceedings is that the appellant had provided business support services to card companies. It was admitted in the show cause notice that the appellant was not raising any invoices to the card companies. It is very simple in accounting standards that, unless an invoice is raised, consideration is not collected. Therefore, it is very clear from the record that the appellant was not receiving any consideration from card companies.

Counsel For Appellant: Vishal Agarwal

Counsel For Respondent: Suvir Misra

Case Title: Bigtree Entertainment Pvt. Ltd. Versus Commissioner of Service Tax VI, Mumbai

Case No.: Service Tax Appeal No. 87428 of 2016

Click Here To Read The Order