Taxability of amusement facilities, Services provided to recognized sports body by an individual
JUNE 22, 2012
By S B Parikh
THE activities of "Admission to entertainment events or Access to amusement facilities" have been kept in "Negative List of Services" at its clause "(j)". The terms "entertainment event" and "amusement facility" have been defined at Section 65B of the Finance Act, 1994, as being amended by the Finance Act, 2012, with effect from 1 st July 2012, as under:
(24) " entertainment event" means an event or a performance which is intended to provide; recreation, pastime, fun or enjoyment, by way of exhibition of cinematographic film, circus, concerts, sporting event, pageants, award functions, dance, musical or theatrical performances including drama, ballets or any such event or programme.
(9) " amusement facility " means a facility where fun or recreation is provided by means of rides, gaming devices or bowling alleys in amusement parks, amusement arcades, water parks, theme parks or such other place but does not include a place within such facility where other services are provided.
(emphasis supplied)
It appears that the definition of the term "amusement facility" is little ambiguous and requires amendment. It is not clear whether the tailing portion, " but does not include a place … …" is applicable to the immediate preceding words "such other place" only or it is applicable to amusement parks, amusement arcades, water parks and theme parks also. As per the proposed definition, the facility of fun or recreation provided by means of rides, gaming devises or bowling alleys in amusement parks, amusement arcades, water parks, theme parks or such other places are to be treated as amusement facility but, if such activities will be provided in a place whether other services are also provided, then such facilities of rides, gaming devises or bowling alleys will not be qualify as "amusement facility". We know that the coverage of the newly defined term "service" is very wide. If the facilities of rides, gaming devises or bowling alleys are being provided in a mall or in an open ground, where some other services are also being provided, such facilities would not fall under the definition of "amusement facility". Further, the place specific restriction appears in the definition of "amusement facility" does not appear in the definition of "entertainment event", even though both services are covered under a single clause of the Negative List. Therefore, the "entertainment event" performed in a place where other services are also provided would remain in the Negative List but, the "amusement facility" provided in such place would attract Service Tax.
Services provided to a recognized sports body by an individual as a player, referee, umpire, coach or manager for participation in a tournament or championship organized by a recognized sports body are exempt under mega exemption Notification No. 12/2012-ST dated 17.3.2012 (Sl.No.10) with effect from 1.7.2012. However, services provided by individual such as selectors, commentators, curators, technical experts etc. are taxable. (Refer to Para 6.6.1 of the Draft Guidance Paper A annexed to the D.O. letter dated 16.3.2012 issued by the Joint Secretary (TRU) from F.No. 334/1/2012, http://cbec.gov.in/ub1213/do-jstru2.pdf ). As the intention is to give exemption to the services provided by sportsperson to recognized sports body, the logic behind exempting services of player is understandable. But, it is not understood that why services of other persons viz. referee, umpire, coach and manager are being made exempted vis-à-vis services of selector, commentator, curator, technical expert etc. are being made taxable. In this regard, the following Table may be referred:
Service provider | Whether providing service | Exempt / Taxable |
on playground | during the play |
| Player | Y | Y | E |
Referee | Y/N | Y | E |
Umpire | Y | Y | E |
Coach | Y | N | E |
Manager | N | N | E |
Selector | N | N | T |
Commentator | N | Y | T |
Curator | Y | N | T |
Technical expert etc. | N | Y/N | T |
Taxability of the above mentioned service providers may be rationalized.
The following activities of have been kept in the proposed Negative List of Services.
(e) Trading of goods.
(f) Any process amounting to manufacture or production of goods.
The activity of trading of goods involves transfer of title in goods by way of sale and therefore not covered in the proposed definition of the term "service" itself. As this activity is not a ‘service', it appears that there is no need to keep it in the Negative List of Services. As regards the activity of ‘manufacture', it is commonly known that the scope of the terms "manufacture" and "service" are totally different. There is nothing in the definition of the term "service" to exclude the process amounting to manufacture or production of goods. So, the proposed definition of the term "service" includes manufacturing activities also, which is not tenable. It is suggested that the process amounting to manufacture or production of goods may be excluded from the definition of the term "service" itself and then be removed from Negative List of Services.
(The views expressed by the author are his personal views.)
