2022 (10) TMI 141 - AT - Service Tax

Levy of service tax - sponsorship services - reverse charge mechanism - period in the present case involved is prior to 01.07.2010 - HELD THAT - From the clause related to sponsorship service before and after the amendment makes it clear that prior to 01.07.2010, the receipt of sponsorship in relation to the sports event was not taxable, however the same became taxable after 01.07.2010 - In the present case, the sponsorship received from BCCI-IPL is clearly in respect of cricket sports events which conducts cricket matches of T-20, therefore, the sponsorship is clearly related to the sports events which was not included under the sponsorship service as per sub clause (zzzn) prevailing prior to 01.07.2010, therefore, the same is not taxable. The appellant is not liable to pay service tax on the sponsorship service in the facts of the present case - Appeal allowed - the issue in hand stand settled in favour of the assessee.

Summary

Issues:
1. Liability of service tax on sponsorship service under reverse charge mechanism.
2. Interpretation of the definition of 'Sponsorship Service' in relation to sports events.
3. Applicability of exemption to sponsorship service in relation to sports events prior to 01.07.2010.
4. Comparison of different judgments on similar issues.

Issue 1: Liability of service tax on sponsorship service under reverse charge mechanism:
The case involved a dispute regarding the liability of the appellant to pay service tax on sponsorship service under the reverse charge mechanism. The appellant had made payments to BCCI-IPL for sponsorship services, which were claimed to be taxable. The department issued a show cause notice, leading to the present appeal.

Issue 2: Interpretation of the definition of 'Sponsorship Service' in relation to sports events:
The Tribunal analyzed the definition of 'Sponsorship Service' under the relevant sub-clauses before and after the amendment. It was observed that prior to 01.07.2010, sponsorship related to sports events was not taxable. The sponsorship received from BCCI-IPL was deemed to be in relation to cricket sports events, which were excluded from the taxable service of sponsorship before the amendment.

Issue 3: Applicability of exemption to sponsorship service in relation to sports events prior to 01.07.2010:
The Tribunal referred to various circulars and judgments to support the contention that sponsorship service related to sports events was not taxable before 01.07.2010. The analysis of the sponsorship agreement and the nature of the events led to the conclusion that the appellant was not liable to pay service tax on the sponsorship service in the present case.

Issue 4: Comparison of different judgments on similar issues:
The Tribunal compared the present case with a previous judgment involving M/s Hero Honda Motors Limited, where a similar sponsorship arrangement with BCCI for IPL matches was considered. The Tribunal upheld the decision that sponsorship of IPL matches fell within the exclusionary clause of the Act, thereby not constituting sponsorship of sports events.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential relief. The judgment highlighted the distinction between sponsorship service related to sports events and the applicability of service tax based on the legislative provisions and interpretations.