Mumbai Tribunal Exempts BookMyShow From Service Tax On Credit Card Transactions; Report

In a ruling, the Mumbai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has absolved BookMyShow, the renowned online entertainment ticketing platform, from the obligation to pay service tax on transactions conducted through credit card companies. The verdict arrived at after scrutiny of financial arrangements, marks an important moment for the digital ticketing industry.

At the heart of the matter lay the intricate financial dynamics between BookMyShow and various credit card entities. The tribunal's decision, rendered recently, underscores the platform's exemption from service tax liabilities concerning transactions routed through card companies.

BookMyShow's operational model involves collaborations with cinema houses, facilitating seamless ticketing experiences for patrons. When tickets are booked via its platform, the company receives payments comprising ticket costs and convenience fees, promptly remitting the ticket proceeds to the respective cinema houses or event organizers. Notably, BookMyShow diligently paid service tax on the convenience fees it earned.

During the fiscal years spanning 2010-11 to 2014-15, the platform amassed approximately Rs 52.78 crores from transactions with card companies. However, service tax authorities contended that BookMyShow owed Rs 6.33 crore in service tax and subsequently issued a demand notice. The platform, in response, argued that it functioned as a conduit, obligated to transmit the actual ticket costs to cinema houses.

Furthermore, BookMyShow's engagements with various card companies encompassed agreements facilitating discounts and complimentary tickets for customers. Under these agreements, when customers utilized eligible bank credit cards for ticket purchases, the disparity between customer payments and cinema house receipts was covered by the credit card companies, with transactions routed through BookMyShow. Debit notes were issued to the card companies for this purpose.

Dismissing the revenue department's assertions, CESTAT refuted claims that BookMyShow was rendering business support services to credit card companies. The tribunal's ruling explains the platform's role as a facilitator, streamlining transactions between customers, cinema houses, and card companies without assuming tax liabilities on card transactions.

This verdict holds far-reaching implications not only for BookMyShow but also for the broader digital ticketing ecosystem. It reaffirms the portrayal of responsibilities within online transactions, providing clarity on taxation frameworks and operational dynamics.

*Inputs from The Times Of India*