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2023 (6) TMI 1339 - AT - Service TaxTaxability - Business Support Services (BSS) or not - receipt of the appellant-assessee s share in the Central Rights Income is a consideration for rendering alleged services to BCCIIPL in organizing the IPL tournament - 10% of the payments made by Franchisee Company to the foreign players - reverse charge mechanism - payments made to EM Sporting Holdings Limited for management consultancy services under RCM - costs incurred in marketing and PR activities outside India under RCM - reversal of common CENVAT Credit availed for providing taxable and exempt output service - 90% of payments made by Franchisee company to the foreign players under RCM - 100% of payments by the Franchisee company to foreign coaches and support staff under RCM. Whether receipt of the appellant-assessee s share in the Central Rights Income is a consideration for rendering alleged services to BCCIIPL in organizing the IPL tournament, and whether it is taxable as Business Support Services ? - HELD THAT - The Tribunal by relying upon the decision of the Tribunal in the case of Mormugao Port Trust Vs. CCE 2016 (11) TMI 520 - CESTAT MUMBAI has set aside the demand holding that in case of joint venture contract, there is neither an intention to render a service to the other partner(s) nor is there any fixed consideration quid pro quo for any particular service of a partner. It has further been held that a contractorcontractee or the principal-client relationship, which is the essential element of any taxable service, is absent in the case of the partners or co-venturers in a joint venture agreement. In the present case, since the demand of Rs.19,15,11,610/- in respect of Central Rights Income arising out of the franchise agreement cannot be considered as provision of any service between the members to the franchise agreement, we are of the view that such demand cannot be confirmed on the appellants-assessee. Whether 10% of the payments made by Franchisee Company to the foreign players is taxable under the reverse charge mechanism ( RCM ) as BSS on the basis that the players carry out promotional activities (incl. wearing uniforms with logos, etc.)? - HELD THAT - The said issue has already been dealt with by the Co-ordinate Bench of this Tribunal, in the case of Sourav Ganguly Vs. Commissioner of Service Tax, Kolkata (Now Commissioner of Central Goods Service Tax Central Excise, Kolkata South) 2020 (12) TMI 534 - CESTAT KOLKATA , wherein it was held that the view taken by the commissioner is not correct as the players had received the fees for the purpose of playing cricket only and even otherwise, it is a settled principle of law that if no machinery provision exists to exclude nontaxable service (playing cricket) from a composite contract, the same is not taxable since law must provide a measure or value of the rate to be applied and any vagueness in the legislative scheme makes the levy fatal. Thus, the Tribunal held in this case that the confirmation of demand could not be sustained. Considering that the ratio of the above decision squarely applies to the present case in hand, we are of the view that the demand of service tax for Rs.47,91,703/- towards fees paid to foreign players and other professionals on RCM basis is not sustainable. Whether payments made to EM Sporting Holdings Limited for management consultancy services are taxable under RCM under taxing entry for Management or Business Consultant s Service? - HELD THAT - The disputed period for which demands were raised relate to 2008-2009 and 2011-2012, much prior to the amendment to Section 67 introduced w.e.f. 14.05.2015. Hence, the confirmation of demand for Rs.90,86,726/- in respect of reimbursable expenses to EM Sporting Holdings Limited on RCM basis cannot be considered as there exists no legal provision for charging to service tax on such reimbursement charges. Thus, we are of the view that such demand cannot be confirmed on the appellantsassessee. Whether costs incurred in marketing and PR activities outside India is taxable under the taxable service for BSS, on RCM? - HELD THAT - The identical issue was considered by the Coordinate Bench of this Tribunal, in the case of KPH Dream Cricket Pvt. Ltd. Vs. CCE ST, Chandigarh-I 2019 (5) TMI 1171 - CESTAT CHANDIGARH . Upon consideration of such issue, the Tribunal had held that the main object of the appellant-assessee is to promote game of cricket in India through IPL tournaments. For obtaining service of organizing the said tournaments cannot be treated a service is in nature of Business Support Service. Therefore, no service tax is leviable under the category of Business Support Service as discussed hereinabove in the preceding paragraphs, hence the demand of service tax is not sustainable. Further, the documents produced by the appellants-assessee indicate that the expenses incurred were on account of purchase of match tickets in UK, creation of DVD titled Rajasthan Royals road to victory etc, which were reimbursed to the foreign vendor - As the present case is identical in the factual matrix to the above case already decided by the Tribunal, it is considered that there exists no ground to deviate from the above stand. Accordingly, the confirmation of demand Rs.22,48,336/- towards service tax liability on reimbursable amount paid to foreign vendors on RCM basis is not sustainable. Whether the appellant is required to reverse common CENVAT Credit availed for providing taxable and exempt output service? - HELD THAT - The explanation 3 to Rule 6(1) of the Cenvat Credit Rules, 2004 was amended vide notification No. 13/2016-C.E. (NT) dated 01.03.2016, wherein the exempted service was expanded to include an activity which is not a service as defined under Section 65B (44) of the Finance Act, 1994 w.e.f. 01.04.2016, for which reversal of cenvat credit is required. Hence, prior to this there was no legal requirement legally binding an assessee to reverse cenvat credit of inputs or inputs services taken on such activities which are not services under the scope of the said Finance Act, 1994. Considering the above legal position in respect of Cenvat Credit Rules, 2004 and that the ratio of the above decision squarely applies to the present case in hand, the confirmation of demand Rs.2,18,58,230/- towards common Cenvat credit reversal is not sustainable. Whether 90% of payments made by Franchisee company to the foreign players is taxable under RCM as BSS on the basis that they carry out promotional activities (incl. wearing uniforms with logos, etc.)? - HELD THAT - The issue has been addressed in a number of cases earlier by Co-ordinate Benches of the Tribunal and in the case of M/s KPH Dream Cricket Pvt. Ltd. 2019 (5) TMI 1171 - CESTAT CHANDIGARH it was clearly held that the main activity of players, who were engaged under a contract by the appellants-assessee, is to play cricket apart from engagement of promotional activities which are ancillary to the main activity of playing cricket. On drawing support from various decisions held in favour of the appellants-assessee, the Tribunal held in this case that on player s fee, no service tax is payable and upheld the decision of the Commissioner in rightly dropping the demand of service tax on player s fees - the instant case is covered by the decision of the Tribunal in the above case, and thus there are no merit for interfering with the decision of the learned Principal Commissioner in dropping the demand of service tax in the impugned order. Whether 100% of payments by the Franchisee company to foreign coaches and support staff is taxable under RCM as BSS on the basis that they carry out promotional activities? - HELD THAT - As the coaching in the field of sports has been specifically excluded from the applicability of service tax vide definition of commercial training or coaching centre under section 65(27) of the Finance Act, 1994, and further as the service of coaching is not provided by a centre but by an individual coach and support staff, Principal Commissioner concluded that the service tax is not chargeable on such activity. Further, in this case the fees pertains to coaching the cricket players who are playing for the team and the amount paid is attributable to the coaching service or support service and thus service tax cannot be demanded on these fees and services, as sports coaching services are exempt - the demand of service tax on this issue is not sustainable and appeal made by the Revenue does not survive. The impugned order of Principal Commissioner of Service Tax, Mumbai-IV confirming the adjudged demands are liable to be set aside as being not sustainable in law - Appeal allowed.
Issues Involved:
1. Taxability of Central Rights Income. 2. Taxability of 10% payments to foreign players under Reverse Charge Mechanism (RCM). 3. Taxability of payments to EM Sporting Holdings Limited for management consultancy services under RCM. 4. Taxability of costs incurred in marketing and PR activities outside India under RCM. 5. Reversal of common CENVAT Credit. 6. Taxability of 90% payments to foreign players under RCM. 7. Taxability of 100% payments to foreign coaches and support staff under RCM. Summary: 1. Taxability of Central Rights Income: The Tribunal referenced the case of *KPH Dream Cricket Pvt. Ltd. vs. CCE & ST, Chandigarh-I*, concluding that the Central Rights Income from the franchise agreement cannot be considered as provision of any service between the parties. The demand of Rs.19,15,11,610/- was set aside as there is no contractor-contractee or principal-client relationship in a joint venture agreement. 2. Taxability of 10% payments to foreign players under RCM: The Tribunal found that the players were engaged primarily to play cricket, and the promotional activities were ancillary. Referring to *Sourav Ganguly vs. Commissioner of Service Tax, Kolkata*, the Tribunal held that the confirmation of demand for Rs.47,91,703/- for promotional activities under RCM is not sustainable. 3. Taxability of payments to EM Sporting Holdings Limited for management consultancy services under RCM: The Tribunal referenced *Union of India vs. Intercontinental Consultants and Technocrats Pvt. Ltd.*, noting that reimbursable expenses prior to the amendment of Section 67 effective from 14.05.2015 cannot be taxed. Thus, the demand of Rs.90,86,726/- was set aside. 4. Taxability of costs incurred in marketing and PR activities outside India under RCM: Referring to *KPH Dream Cricket Pvt. Ltd. vs. CCE & ST, Chandigarh-I*, the Tribunal held that expenses for promoting cricket in India through IPL tournaments cannot be treated as Business Support Services. The demand of Rs.22,48,336/- was deemed unsustainable. 5. Reversal of common CENVAT Credit: The Tribunal, citing *L Balaji and Others vs. CCE & ST, Chennai* and *KPH Dream Cricket Pvt. Ltd.*, held that no CENVAT credit reversal is required for revenue from stadium gate receipts and prize money. The demand of Rs.2,18,58,230/- was set aside. 6. Taxability of 90% payments to foreign players under RCM: The Tribunal upheld the Principal Commissioner's decision, referencing *KPH Dream Cricket Pvt. Ltd.*, that players' fees for playing cricket are not taxable under RCM. The Revenue's appeal to tax 90% of the payments was dismissed. 7. Taxability of 100% payments to foreign coaches and support staff under RCM: The Tribunal agreed with the Principal Commissioner that coaching services are distinct and exempt from service tax under the definition of 'commercial training or coaching centre.' The demand for service tax on coaching fees was not sustainable, and the Revenue's appeal was dismissed. Conclusion: The Tribunal set aside the Principal Commissioner's order confirming the adjudged demands on the appellants-assessee and dismissed the Revenue's appeal, deeming it lacking in merits. Both appeals were disposed of accordingly.
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