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Richa Mishra

The event management services (EMS) were brought under the service tax net by the Finance Act, 2002, with effect from August 16, 2002, vide a notification.

New Delhi, Sept. 8

THE Federation of Indian Chambers of Commerce and Industry has urged the Finance Ministry to look into the confusion over service tax for event management companies.

According to the chamber, the service element alone should be taxed and not the gross amount billed by such companies, including the services outsourced.

In a letter to Mr A.K. Singh, Chairman of the Central Board of Excise and Customs (CBEC), the chamber has suggested, "the service tax should be levied only on the service element and not on the other services hired by event management company like that of photographer, videographer, sound recording studio, advertising agency, mandap keeper, security agency, etc."

The event management services (EMS) were brought under the service tax net by the Finance Act, 2002, with effect from August 16, 2002, vide a notification. "The service tax as a matter of principle should be imposed on the value of taxable services. However, the field formations in different States are taking different views on the same," a FICCI official said.

He further emphasised that "service tax by definition is a tax on the service provided and not on the cost of hiring light and sound equipment or the cost of putting up a stage, or the cost of video projections or the cost of artists and performers. The tax was, in all probability, meant to be on the cost of managing all these elements that go into creating an event. In fact, this is in line with a clarification given by the department that if a client pays directly to sound and light companies, stage suppliers, they are not liable to pay service tax on these accounts."

The confusion has arisen because of another clarification given by the department that service tax is leviable on the gross amount charged by the event management companies, according to industry insiderspoint out. "We are sure it cannot be the intention of the Government to charge the service tax on services not provided by the event management company but simply procured by them from external sources," they argue.

A case in point is the advertising segment, a FICCI official said. "The service tax is not levied on the cost of the space or material procured by the agency from newspapers or printers etc, but only on the 15 per cent agency commission earned by the agency".

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