2018 (4) TMI 111 - AT - Service Tax

Business Support Services - Revenue entertained a view that the appellant was promoting activities of the franchisee by wearing franchisee s official cricket clothing, displaying franchisee s mark/ logo etc. which was nothing but akin to promotion or marketing of the logo/ brands/ marks of the franchisee/ sponsor - Held that - Hon ble Calcutta High Court in the case of Shri Sourav Ganguly Vs Union of India and Others 2016 (7) TMI 237 - CALCUTTA HIGH COURT has dealt with an identical issue and held that It was not the intention of the legislature that any and every kind of activity which can loosely be termed as Business would attract service tax. It being a taxing provision, the same must be construed strictly and any benefit of doubt in the matter of interpretation of the provision must go in favor of the assessee. No service was provided by the player, nor requiring him to discharge any service tax. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant's activities during the Indian Premier League matches constitute 'Business Support Service' under Section 65(105)(zzzq) of the Finance Act, 1994.
2. Whether the appellant is liable to pay service tax on the consideration received for promotional activities.
3. Whether the appellant's activities can be classified as 'Business Support Services' or 'Brand Promotion Services'.
4. Whether the appellant's status as a professional cricketer makes him liable for service tax.

Analysis:

Issue 1:
The appellant, a professional cricket player, received consideration for playing for a team in the Indian Premier League (IPL). The revenue claimed that the appellant's activities, such as wearing the team's clothing and promoting the team's brand, fall under 'Business Support Service.' The revenue issued a show cause notice demanding service tax. The Order-in-Appeal upheld the demand. The Tribunal considered a similar case from the Calcutta High Court involving a cricketer and promotional activities. The High Court held that the cricketer's role did not constitute taxable service, as he was essentially an employee of the franchisee, not an independent service provider. Following this reasoning, the Tribunal set aside the impugned order and allowed the appeal.

Issue 2:
The revenue contended that the appellant's promotional activities were subject to service tax, as he received remuneration for endorsing the franchisee's brand. However, the Tribunal, following the Calcutta High Court's decision, found that the appellant's role as a cricketer did not involve providing independent services that could be classified as 'Business Support Service.' Therefore, the Tribunal concluded that the appellant was not liable to pay service tax on the consideration received for promotional activities.

Issue 3:
The Tribunal analyzed the distinction between 'Business Support Services' and 'Brand Promotion Services' as per the provisions of the Finance Act, 1994. It noted the High Court's observation that the appellant's activities did not fall under the category of taxable services, as he was essentially an employee following the franchisee's instructions. The Tribunal agreed with the High Court's interpretation and set aside the order demanding service tax, ruling in favor of the appellant.

Issue 4:
Considering the appellant's status as a professional cricketer and the nature of his engagement with the IPL franchise, the Tribunal determined that the appellant's role did not amount to providing services independently. Instead, he was deemed an employee of the franchisee, performing under their instructions. Therefore, the Tribunal concluded that the appellant was not liable for service tax based on the considerations received for his activities during the IPL matches.

In conclusion, the Tribunal, following the precedent set by the Calcutta High Court, ruled in favor of the appellant, setting aside the demand for service tax on the promotional activities conducted during the IPL matches.