No Service Tax liability for BookMyShow on transactions with credit card companies
Mumbai, Apr 28, 2024
In a recent ruling, the Mumbai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that BookMyShow, an online entertainment ticketing platform, is not liable to pay service tax on transactions with card companies. The tribunal's decision came after careful consideration of the intricate financial arrangements between BookMyShow and various credit card companies.
The ticketing portal enters into agreements with cinema houses for payment of tickets booked through its platform. When tickets are booked via its platform, it receives an amount towards the ticket cost along with a convenience fee and remits the ticket cost to the cinema house or event holder. It had duly paid service tax on the convenience fee earned by it. CESTAT bench noted that it did not retain any amount that was received from card companies and that was intended to be paid to cinema houses.
During the period from financial year 2010-11 to financial year 2014-15, it collected around Rs. 52.78 crores from card companies. The service tax authorities contended that BookMyShow was required to pay a service tax of 6.33 crore and raised a demand notice. This was contested, by stating that the ticketing portal was contractually obliged to collect the actual cost of tickets, and the same was remitted to cinema houses.
For allowing the card companies to extend offers of discounts and free tickets, it had also entered into agreements with various card companies. When the ultimate customer used 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 was borne by the credit card company and was routed through BookmyShow, for which it issued debit notes to the card companies.
CESTAT dismissed the revenue department's claim that BookMyShow was providing business support services to credit card companies.
TOI has earlier analysed these issues in the context of Goods and Services Tax (GST). In this story, Pratik Jain, indirect tax partner at Price Waterhouse had explained, “However, if the bank/UPI payment gateway merely join hands with the seller/e-portal, both work on an independent basis and offer discounts/incentives on their own account directly to the customer, there may be no GST implications. This is because, arguably neither of the parties derive any benefit from the other. Clear cut language in the contractual documents is a must.”
[The Times of India]
