2023 (4) TMI 347 - AT - Service Tax

Classification of services - Business Auxiliary Service or not - appellant is a cricket player and engaged in paying cricket in Indian Premier League for a team owned by M/s. KPH Dreams Cricket Pvt. Limited, Chandigarh, Punjab (KPH) under the agreement between KPH and the appellant Shri Ajitesh Kamlesh Argal - receipt of remuneration - HELD THAT - The major amount of remuneration received is towards engaging the appellant by KPH to play cricket in Indian Premier League matches - in the identical agreements, assigned other players engaged by different teams, in all those cases, this Tribunal relying on the Calcutta High Court judgment in the case of SOURAV GANGULY VERSUS UNION OF INDIA OTHERS 2016 (7) TMI 237 - CALCUTTA HIGH COURT held that arrangement between the owner Company and the cricket player is of employment hence players are not directly involved in brand promotion of a brand owner. Therefore, the activity of the cricket player does not fall under the category of Business Auxiliary Services - As per this settled legal position, in the present case also involving similar agreement and arrangement, the demand under Business Auxiliary Service does not sustain. Demand of service tax on remuneration received by the appellant from M/s. Nike India Pvt. Limited - HELD THAT - In this case the appellant is indeed involved in direct brand promotion for the brand owner however, the appellant have claimed that the value of such service is well within the threshold limit provided under exemption notification 6/2005-ST dated 01.05.2005 - since the remuneration received by the appellant from KPH does not involve any service, the appellant shall be eligible for small scale exemption provided under Notification No. 6/2005-ST dated 01.05.2005 upto threshold limit of gross value in a financial year. The demand raised in the impugned orders is not sustainable - Appeal allowed - decided in favour of appellant.

Summary

Issues involved:
The issues involved in the judgment are whether the remuneration received by the appellant for playing cricket and brand promotion is taxable under service tax, and whether the demand of service tax on remuneration received from M/s. Nike India Pvt. Limited is sustainable.

Issue 1: Taxability of remuneration for playing cricket:
The appellant, a cricket player, received remuneration for playing in the Indian Premier League for a team owned by KPH Dreams Cricket Pvt. Limited. The department contended that the appellant provided services of brand promotion, falling under Business Auxiliary Service and thus taxable under service tax. However, the appellant argued that the remuneration was for employment with KPH and not for brand promotion. The Tribunal referred to various judgments and held that the arrangement between the cricket player and the team owner is one of employment, not brand promotion. Therefore, the demand under Business Auxiliary Service was not sustainable.

Issue 2: Taxability of remuneration from M/s. Nike India Pvt. Limited:
Regarding the remuneration received from M/s. Nike India Pvt. Limited for brand promotion activities, the appellant claimed that after deducting the remuneration from KPH, the amount fell below the threshold limit for small scale exemption. The Tribunal found that the appellant was indeed involved in direct brand promotion for M/s. Nike India Pvt. Limited. However, since the remuneration received from KPH did not involve any service, the appellant was eligible for the small scale exemption. The Revenue was directed to verify the calculation, and the demand raised in the impugned orders was held to be not sustainable.

Separate Judgement:
The judgment was delivered by Mr. Ramesh Nair, Member (Judicial) and Mr. C.L. Mahar, Member (Technical) at the Appellate Tribunal CESTAT Ahmedabad.