2012 (10) TMI 491 - AT - Service Tax

Business Support Service - appellants are international cricket players - petition for waiver of pre deposit - Held that - As decided in M/s KPH DREAM CRICKET (P) LTD Versus CCE, CHANDIGARH 2012 (7) TMI 504 - CESTAT, NEW DELHI the service tax was demanded from the franchisees in respect of fee paid to foreign players by invoking reverse charge mechanism for recovering the service tax since the players involved were foreigners. Also the appellants had been required to deposit 10% of the service tax demanded as pre-deposit. As entire amount cannot be and may not be considered as available for promotional events and also considering the fact that whether extended period can be invoked in these cases or not has to be considered in detail, it is appropriate that appellants deposit about 20% of the liability within the normal period quantifying the same as Rs.7.5 Lakh and Rs.3.5 lakh respectively for the the appellant cricketers - against assessee.

Summary

Issues involved:
Determining liability for service tax on fees paid to international cricket players for playing in IPL seasons under the category of "Business Support Service"; interpretation of employment relationship in contractual agreements; consideration of promotional events and their impact on the nature of the contract; application of reverse charge mechanism for service tax recovery; calculation of pre-deposit amounts and waiver of balance dues during pendency.

Analysis:

1. Liability for Service Tax on Fees:
The case involved two international cricket players engaged by franchisees to play in IPL seasons. The issue centered on whether the fees paid to the players were liable to service tax under the category of "Business Support Service." The contention was that the players, by wearing team clothing with sponsor logos and participating in promotional events, were providing business support services. The appellants argued that they were employed as professional cricketers and not for promotional activities, emphasizing the main purpose of their employment was to play cricket.

2. Interpretation of Employment Relationship:
The debate also focused on the nature of the relationship between the players and franchisees. While the appellants claimed an employer-employee relationship, citing the design of cricket clothing as part of the employment agreement, the respondent highlighted contractual provisions mandating participation in promotional events and deductions for non-compliance. The respondent argued that the contract aimed at promoting business aspects of IPL and sponsors, indicating a broader scope beyond cricket playing.

3. Application of Reverse Charge Mechanism:
Reference was made to previous tribunal decisions involving service tax on fees paid to foreign players, applying the reverse charge mechanism for tax recovery. The applicability of these decisions to the current case was discussed, considering the implications of deductions from player fees for promotional events. The need for a detailed examination of the contractual provisions and deductions was emphasized before final conclusions could be drawn.

4. Calculation of Pre-deposit and Waiver:
After thorough discussions and considering arguments from both sides, the tribunal quantified the pre-deposit amounts at 20% of the liabilities within the normal limitation period. Specific figures were provided for each player, and compliance deadlines were set. The tribunal acknowledged the complexity of the issue, the lack of specific allocation of player fees for activities, and the need for detailed consideration of the limitations and implications of the contractual terms.

5. Conclusion:
In conclusion, the tribunal ordered the pre-deposit of specified amounts by the players within a set timeframe, with a waiver of balance dues during the pendency of the case. The decision highlighted the need for a detailed assessment of the contractual provisions, deductions, and the nature of the relationship between the players and franchisees before reaching a final determination on the liability for service tax and compliance requirements.

This comprehensive analysis encapsulates the key legal aspects and arguments presented in the judgment, outlining the intricacies of the case and the tribunal's decision-making process.