2018 (2) TMI 1186 - AT - Service Tax

Club or association service - the affiliation fee and the membership fee received from district level academy members of the assessee/appellant - Held that - There can be no service and tax liability in such arrangement of members availing certain facilities provided by association of such members forming into a club - the demand of service tax under club or association service and also penalties relatable to such tax liability. Irrespective of the status of BCCI as a charitable organization or otherwise, BCCI is sole organization incharge of game of cricket officially, in India. Managing, controlling and organizing the game of cricket, its development and other allied activities cannot be considered as business or commerce for service tax purpose. Such activities are with reference to managing a recognized sports. BCCI being the sole authority to manage the sport of cricket in India cannot be considered as involved in business or commerce with reference to activity of developing infrastructure for such sport. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Service tax liability of a cricket association for the sale of space for advertisement.
2. Service tax liability under the category of club or association service.
3. Applicability of penalties under Sections 78 and 76 of the Finance Act, 1994.

Analysis:
1. The judgment revolves around the service tax liability of a cricket association for the sale of space for advertisement. The impugned order held the association liable to pay service tax for the sale of space for advertisement during a specific period. The Original Authority differentiated between the service of "sale of space for advertisement" and "support service of business or commerce." The association was found liable for service tax under the former but not the latter category, based on its arrangement with the Board of Control for Cricket in India (BCCI). The impugned order confirmed a service tax liability of a specific amount under the heading "Club or Association Service" for services provided to the members of the association. Penalties under Sections 78 and 76 of the Finance Act, 1994 were imposed on the association.

2. The judgment further delves into the issue of service tax liability under the category of club or association service. The association contested the confirmation of service tax demand under this category without providing legal or factual grounds for their appeal. The Original Authority's findings regarding the confirmation of service tax under the sale of space for advertisement were upheld as the association failed to present any basis for contesting the decision. However, the service tax liability under club or association service was set aside based on precedents set by various High Courts and the Tribunal, establishing that there is no service tax liability in arrangements where members avail facilities provided by an association forming a club.

3. The judgment also addresses the applicability of penalties under Sections 78 and 76 of the Finance Act, 1994. The Revenue's appeal was dismissed as the tribunal found no merit in challenging the Original Authority's decision regarding the association's service tax liability. The appeal filed by the association was partly allowed only in setting aside the service tax liability and penalties related to club or association service. The tribunal concluded that the activities of managing, controlling, and organizing the game of cricket by the association, in collaboration with the BCCI, do not fall under the purview of business or commerce for service tax purposes.

In conclusion, the judgment clarifies the service tax liabilities of the cricket association, distinguishing between different categories of services provided and upholding the Original Authority's decision on service tax liability under the sale of space for advertisement while setting aside the liability under club or association service.