2018 (1) TMI 266 - AT - Service Tax

Business Auxiliary Services - amount received towards playing for IPL and for promotional activities - Held that - though in the SCN the Respondent was made liable to pay service tax but as rightly held by the adjudicating authority, no specific clause of Section 65 (19) defining Business Auxiliary service has been shown to be applicable to levy service tax. It is not appearing from the show cause notice as to what goods or services the Respondent has promoted or helped to promote - The Brand promotion fee was not taxable until Negative list came into effect from 01.07.2010 and hence there cannot be any liability upon the Respondent till that period - the Respondent is not liable to service tax - appeal dismissed - decided against Revenue.

Summary

Issues:
Taxability of consideration received by a professional cricketer for playing in IPL under "Business Auxiliary Services"

Analysis:
The case involved the taxability of the consideration received by a professional cricketer for playing in the Indian Premier League (IPL) under the category of "Business Auxiliary Services." The cricketer had entered into a contract with a franchisee owner of an IPL team and received a sum of ?1.12 crores for playing for the team during 2008-2012. The revenue sought to tax this consideration based on the grounds that it was for playing in the IPL and promotional activities.

The revenue contended that the cricketer had granted rights for filming, using player identification for team promotion, and assisting in maximizing promotional benefits, which constituted business auxiliary services. The agreement stipulated 10 appearances by the player for promotional activities related to brands and goods. The revenue argued that the consideration received was against these services promoting brands or goods, falling under business auxiliary services.

On the other hand, the cricketer's counsel argued that only 10% of the fee was for brand promotion, while the remaining 90% was for match fees. Citing legal precedents, including a judgment from the Calcutta High Court and a Tribunal order, the cricketer contended that the amount was not taxable, and even the 10% towards brand promotion fell below the exemption limit each year.

After considering the submissions from both sides, the tribunal found that the show cause notice did not specify any clause defining "Business Auxiliary Service" under which the cricketer could be taxed. The tribunal agreed with the lower authorities that the demand was vague and unenforceable as it did not specify the nature of services provided by the cricketer. Citing legal precedents, the tribunal held that services of brand promotion before a certain date were not taxable and that the brand promotion fee was not taxable until a specific period. The tribunal also noted that the fee towards brand promotion remained below the exemption limit in respective years post a certain date, absolving the cricketer from any service tax liability.

In conclusion, the tribunal ruled in favor of the cricketer, holding that he was not liable to pay service tax, and dismissed the revenue's appeal. The tribunal upheld the impugned order and disposed of the case accordingly.