No Service Tax liability for BookMyShow on transactions with credit card companies

Mumbai: In a recent decision, Mumbai customs benchThe Excise and Service Tax Appellate Tribunal (CESTAT) has deemed BookMyShow as 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 complex financial arrangements book my show and various credit card companies,
The ticketing portal enters into agreements with cinema houses for payment for tickets booked through its platform. When tickets are booked through its platform, it receives an amount for the ticket price along with a convenience fee and remits the ticket price to the cinema hall or event holder. It had duly paid service tax on the convenience fee earned by it. The CESTAT bench said that it has not retained any amount received from the card companies and which was to be paid to the cinema houses.

During the period FY 2010-11 to FY 2014-15, it earned approximately Rs. Rs 52.78 crore from card companies. Service tax officials argued that BookMyShow was required to pay service tax of Rs 6.33 crore and issued a demand notice. This was contested, saying that the ticketing portal was contractually obliged to collect the actual cost of the tickets, and pass it on to the cinema houses.

It also had agreements with various card companies to allow the card companies to increase their offers of discounts and free tickets. When the End Customer uses a credit card of an eligible bank to pay for or purchase cinema or other show tickets, the difference between the payment made by the customer and the payment received by the cinema houses was borne by the credit card company and Was sent through Bookmyshow. For which it issued debit notes to the card companies.
CESTAT rejected the Revenue Department's claim that BookMyShow was providing business support services to credit card companies.
TOI has previously analyzed these issues in the context of the Goods and Services Tax (GST). In this story, Pratik Jain, partner, indirect tax, Price Waterhouse, had explained, “However, if the bank/UPI payment gateway only joins hands with the seller/e-portal, then both work on an independent basis and get discounts on their products. /provide encouragement. Keep your account direct with the customer, there can be no GST implications. This is because neither party arguably gets any benefit from the other. Clear language in contractual documents is important.”