2023 (6) TMI 1081 - AT - Service Tax

Scope/levy of Taxable Service - sponsorship services - amount paid by the appellant towards sponsorship of cricket tournaments namely, ICC Cricket World Cup and Indian Premier League (IPL) - provisions created as well as the taxability of certain portions of services received in view of the provisions of Section 65(105)(zzzn) of the Act, prior to 01.07.2010 - penalty u/s 77 and 78 of FA, 1994 - extended period of limitation. Whether the sponsorship received is relating to sponsorship of sports events or not? - HELD THAT - The appellant has sponsored IPL Cricket tournament and ICC Cricket World Cup during the impugned period. Thus, whether sponsoring of IPL and ICC Cricket World Cup can be equated with sponsoring of sports events or not is the issue involved for resolution of dispute in this appeal - the issue is no longer res integra and is settled in favour of the appellant. In many decisions of the Tribunal, it has been held that no Service Tax is payable on sponsorship of IPL and ICC cricket tournaments during the impugned period. In the case of M/S HERO MOTOCORP LTD VERSUS COMMISSIONER OF SERVICE TAX, DELHI 2013 (6) TMI 447 - CESTAT NEW DELHI , the Tribunal, Delhi has held that the expression in relation to has a very wide connotation and the assessee s activity of sponsorship was in relation to sports events and so, not liable to Service Tax. The above decision has been affirmed by the Hon ble Supreme court vide its order in COMMISSIONER VERSUS HERO MOTOCORP LIMITED 2015 (7) TMI 1163 - SC ORDER and subsequently, followed by the Tribunal, Mumbai in VODAFONE CELLULAR LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-III 2017 (2) TMI 1152 - CESTAT MUMBAI wherein it has been held that, for the period under dispute, no Service Tax demand on sponsorship of sports events can be fastened on the appellant. Thus, the issue in dispute in this appeal is squarely covered by the decisions discussed, the impugned order ordered to be set aside - the provisions made in the books of account by the appellant as per the GAAP towards sharing the expenditure on account of receipt of sponsorship services cannot be subjected to tax as the ingredients for levy of tax are not fulfilled in the absence of any provision of service and when payments were made only in relation to sponsorship of the IPL Cricket tournament. Extended period of limitation - penalties - HELD THAT - As the appeal succeeds on merits, there is no need to examine the issue of invoking the extended period or imposition of penalties. Appeal allowed.

Summary

Issues Involved:
1. Taxability of sponsorship services for cricket tournaments.
2. Invocation of extended period of limitation.
3. Imposition of penalties under Sections 77 and 78 of the Finance Act, 1994.

Summary:

Taxability of Sponsorship Services:

The main issue was whether the amount paid by the appellant towards sponsorship of cricket tournaments, namely, ICC Cricket World Cup and Indian Premier League (IPL), can be subjected to levy of Service Tax. The adjudicating authority held that the services received by the appellant under the category of "sponsorship services" were taxable. However, the appellant contended that during the period from 01.05.2006 to 31.03.2010, sports events were expressly excluded from the purview of sponsorship services under Section 65(105)(zzzn) of the Finance Act, 1994. The Tribunal found that the issue was settled in favor of the appellant in multiple decisions, including M/s. Hero Motorcorp Limited v. Commissioner of Service Tax, Delhi, which was affirmed by the Hon'ble Supreme Court. The Tribunal concluded that no Service Tax is payable on sponsorship of IPL and ICC cricket tournaments during the impugned period.

Invocation of Extended Period of Limitation:

The appellant argued that the entire demand was based on the Service Tax returns duly filed, and extended period of limitation could not be invoked. Reliance was placed on decisions such as Commissioner of Central Tax v. M/s. Zee Media Corporation Ltd. to support this argument. The Tribunal did not find it necessary to examine this issue as the appeal succeeded on merits.

Imposition of Penalties:

The appellant sought the benefit of Section 80 of the Finance Act, 1994, arguing that they were under a bona fide impression that the service provided was not liable to tax. The Tribunal, considering the appeal succeeded on merits, did not delve into the issue of penalties.

Conclusion:

The Tribunal set aside the impugned order, holding that the provisions made in the books of account by the appellant towards sharing the expenditure on account of receipt of sponsorship services could not be subjected to tax. The appeal was allowed with consequential relief as per the law.

Order Pronounced:

(Order pronounced in the open court on 23.06.2023)