2012 (11) TMI 976 - AT - Service Tax

Service tax demand - sponsorship service - applicants entered with an agreement with Board of Control for Cricket in India for organising the IPL tournament wherein the applicants are the sponsors for Umpire under a Sponsor Agreement Held that - Activity is proved to be sponsored of the event service but during the relevant time the sponsorship of the sports event was fully exempt from service tax - in the case of DLF Ltd. (2012 (5) TMI 404 - CESTAT, NEW DELHI ) it was held that the IPL 20-20 tournament is a sports event, applicants are exempt from the levy of service tax as per Section 65(105)(zzzn) of the Finance Act, 1004 pre-deposit waived

Summary

Issues:
1. Whether the activity undertaken by the applicant was covered under the definition of taxable service during the impugned period.
2. Whether the sponsorship activity undertaken by the applicant for a sports event is exempt from service tax.
3. Whether the applicant is liable to pay service tax for the period prior to the withdrawal of exemption for sponsorship of sports events.

Issue 1:
The core issue in this case was to determine whether the activity undertaken by the applicant during the impugned period fell under the definition of taxable service as per Section 65(105)(zzzn). The applicants had entered into a Sponsor Agreement with the Board of Control for Cricket in India for organizing the IPL tournament, where they sponsored umpires. The department contended that this activity constituted 'Sponsoring Service', leading to a service tax demand. However, the Tribunal analyzed the nature of the activity and concluded that the sponsorship of the sports event was fully exempt from service tax during the relevant period.

Issue 2:
The second issue revolved around whether the sponsorship activity undertaken by the applicant for a sports event was exempt from service tax. The applicant argued that the activity was exempt as it related to the sponsorship of a sports event, which was specifically exempted until 1.7.2010. The Tribunal, relying on a previous decision in the case of DLF Ltd. v. CST, where a similar issue was considered, held that the IPL 20-20 tournament qualified as a sports event. Consequently, the Tribunal determined that the applicants were exempt from the levy of service tax as per Section 65(105)(zzzn) of the Finance Act, 1004.

Issue 3:
The final issue was whether the applicant was liable to pay service tax for the period prior to the withdrawal of the exemption for sponsorship of sports events. The Tribunal noted that the exemption for sponsorship of sports events was withdrawn with effect from 1.7.2010. Since the impugned period in this case was before that date, the Tribunal concluded that the applicants were not liable to pay service tax for that period. Citing the exemption provision and the decision in the DLF Ltd. case, the Tribunal granted a 100% waiver of pre-deposit and stayed the recovery of the entire amount of service tax, interest, and penalty during the pendency of the appeal.

This judgment by the Appellate Tribunal CESTAT, Mumbai, addressed the issues surrounding the taxation of sponsorship services provided by the applicants for a sports event. The Tribunal carefully analyzed the legal provisions, exemptions, and precedents to determine that the applicants were exempt from service tax for the period in question due to the specific exemption for sponsorship of sports events. The decision highlighted the importance of interpreting tax laws in alignment with exemptions and relevant case law to arrive at a just outcome.