2015 (12) TMI 146 - AT - Service Tax

Demand of service tax - Sponsorship Service - sponsorship of a sports event, which has a commercial element - Held that - Issue is now settled by the decision of the Tribunal in Hero Honda Motors Ltd. v. CST, Delhi - 2013 (4) TMI 428 - CESTAT NEW DELHI whereby the demands were made on the same grounds - impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
- Appeal against adjudication order confirming demand of Rs. 5,76,80,000 for Sponsorship Service without paying service tax.

Analysis:
The appellant filed an appeal against the adjudication order confirming a demand of Rs. 5,76,80,000 for Sponsorship Service, alleging non-payment of service tax. The Tribunal examined the case where the appellant received sponsorship service from the Board of Control for Cricket in India for Indian Premier League Cricket matches. The Tribunal referred to a previous decision in Hero Honda Motors Ltd. v. CST, Delhi, where it was held that sponsorship in relation to sports events is excluded from service tax liability. The Tribunal criticized the adjudication authority's analysis, stating that sponsorship agreements related to sports events are not subject to service tax. The Tribunal concluded that the adjudication orders were based on fundamental fallacies and quashed them.

The Tribunal emphasized that the sponsorship agreement was in relation to cricket tournaments conducted by BCCI/IPL, which are sports events exempt from service tax. The Tribunal clarified that payments made to BCCI/IPL for sponsorship were indeed related to the tournament (T-20 matches) and not for the organizations' brand image. The Tribunal highlighted that the phrase "in relation to" in the charging provision signifies activities associated with sports events, thereby excluding such sponsorships from service tax liability. Consequently, the Tribunal set aside the impugned order and allowed the appeal, following the precedent established in the Hero Honda Motors Ltd. case.

In light of the decision in Hero Honda Motors Ltd. v. CST, Delhi, the Tribunal overturned the impugned order confirming the demand for Sponsorship Service without payment of service tax. The Tribunal reiterated that sponsorship agreements related to sports events, such as cricket tournaments, are not subject to service tax. By referencing the previous case law and the specific nature of the sponsorship agreement in question, the Tribunal concluded that the demand for service tax was unfounded. As a result, the appeal was allowed, and the impugned order was set aside, aligning with the legal principles established in the Hero Honda Motors Ltd. case.