2026-VIL-342-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Business Exhibition Service, Principle of Mutuality - Appellant buys space in overseas business exhibitions for its members to participate and receives payment from the members – Demand of service tax on the amounts received from the members for facilitating their participation in the overseas business exhibitions - Whether the appellant is liable to pay service tax on the amounts received from its members for facilitating their participation in overseas business exhibitions - HELD - The appellant had merely facilitated participation of its members in business exhibitions organized abroad by others and did not organize any business exhibition itself. There was no organizer-exhibitor relationship established between the appellant and its members. Consequently, the activity did not fall within the definition of "business exhibition service" under the Finance Act, 1994 – Further, the appellant is a non-Government, not-for-profit, industry-led and industry-managed organization with members from the private and public sectors. Being a confederation of industry members, the mutuality principle as laid down by the Supreme Court in State of West Bengal vs. Calcutta Club applies, wherein it was held that no distinct service provider-receiver relationship exists in mutual setups, and associations like the appellant render "self-service" to its members - Accordingly, the activity of the appellant in facilitating participation of its members in overseas business exhibitions is not subject to service tax under the principle of mutuality – The demand of service tax on the amounts received by the appellant for facilitating participation of its members in overseas business exhibitions is set aside and the appeal is allowed - Service Tax on Accrual Basis vs Cash Basis – Demand of service tax based on the balance sheet figures prepared on accrual basis, whereas the appellant had paid service tax on cash receipt basis - Whether the service tax demand based on balance sheet figures prepared on accrual basis is valid when the appellant had paid service tax on cash receipt basis - HELD - The appellant had contended that service tax was payable on cash receipt basis prior to 2011, whereas the balance sheet was prepared on accrual/mercantile basis, leading to a difference between the ST-3 returns and the balance sheet figures. The appellant had also submitted that the figures in the balance sheet reflect the income and expenditure of the organization and have no bearing on the service tax liability or payment - No evidence was led by the appellant to substantiate their contentions. Consequently, it would be appropriate to remand this issue to the original authority for fresh consideration, granting sufficient opportunity to the appellant to submit relevant records and documents to support their case - The issue regarding the demand based on balance sheet figures prepared on accrual basis is remanded for reconsideration by the adjudicating authority
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