2012-TIOL-1145-CESTAT-MUM – Royal Western India Turf Club Ltd. v. Commissioner of Service Tax, Mumbai Royal Western Turf Club Ltd. charged fee from bookies, royalty income from other racing clubs for live telecast of races and royalty from caterers for providing infrastructural facility inside the club – None of the activities taxable under respective categories of “Intellectual Property Rights Services”, “Broadcasting Services” and “Business Support Services” – Total confusion in the minds of

Royal Western Turf Club Ltd. charged fee from bookies, royalty income from other racing clubs for live telecast of races and royalty from caterers for providing infrastructural facility inside the club – None of the activities taxable under respective categories of “Intellectual Property Rights Services”, “Broadcasting Services” and “Business Support Services” – Total confusion in the minds of adjudicating authorities as to the nature of the tax and the measure of the tax – Impugned orders demanding Rs.6 crore set aside – Appeals allowed with consequential relief.

The appellant, engaged in the activity of conducting horse racing, provided stalls to bookies during the race and they accept bets from the public in the premises of the appellant for which the appellant charged fixed and variable fees. They also conducted live telecast of races at other racing clubs in India for which they received royalty income viz. fixed and variable. They also received royalty from caterers who have been permitted to use the infrastructural facilities and operate within the premises of the club.

Four different SCN’s covering the period between 2002 and 2009 were issued classifying the above activities under different categories and the same activity under different categories in different SCNs.

The appellant relied on the case of Madras Race Club vs. CST [2009 (14) STR 646 (T)] and the CBEC Circulars viz. no.334/4/2006-TRU dated 28.02.2006 and no. 109/3/2009-ST dated 23.02.2009 to conclude that the receipts received from bookies were not taxable under the category of Business Support Services and relied on the judgement of the Hon. Bombay High Court in C.K.P. Mandal vs. CCE [2006 (3) STR 183 (Bom)] to conclude that receipts received from caterers also were not taxable under the category of Business Support Services.

For demand under the category of Intellectual Property Rights Services, relying on CBEC Circular No. 80/10/2004-ST dated 17.09.2004 stated that neither the SCN nor the O-I-O stated under which intellectual property would the said activity fall viz. patents, copyrights, trademarks or designs. For demand under “Broadcasting Services”, it was contended that the appellant had been charged under the said category by M/s Essel Shyam Communications for providing technical support for the telecast and hence, they cannot be treated as the provider as well as the receiver of the service at the same time and further stated that the activity of telecasting was brought under the tax net from 01.07.2010 vide clause 65(105)(zzzzr) – permitting commercial use or exploitation of any event.

Held:

After perusing the impugned orders, the Hon. Tribunal held that the orders clearly evidenced lack of clarity and understanding on the part of the department. The same activity viz. telecast of horse race, was classified under “Broadcasting Services” during one period and under “Intellectual Property Rights” during another period. Also, the consideration in respect of telecast of horse races and in respect of bookmakers have been classified under two different categories for the same period based on different modes of payment.

Intellectual Property Rights Service

Neither the SCN nor the impugned orders gave a clear proposal or finding as to what is the intellectual property right involved as clarified by the CBEC Circular dated 17.09.2004 and hence the demand was set aside. Broadcasting Services It was held that the said activity was undertaken by M/s. Essel Shyam Communications who appropriately discharged its liability and that the activity of the appellant was covered under the category of permitting commercial use or exploitation of any event w.e.f. 01-07-2010

 Business Support Services

As regards the activity to make available space to the caterers and bookmakers, it was held that it was nothing but hiring/leasing of immovable property as defined under 65(105)(zzzz) and not taxable as Business Support Service. It relied upon the definition of Business Support Service as defined under 65(104c) and the CBEC circular No.334/4/2006-TRU dated 28-02-2006. Since no merit was found, the entire demand under all the categories was set aside with consequential relief.