2023 (6) TMI 1161 - AT - Service Tax

Levy of service tax - Business Support Services - receipt of the Appellant-assessee s share in the Central Rights Income is consideration for the alleged services rendered to BCCI-IPL in organizing the IPL tournament or not - taxability of 10% of the payments made by Franchisee Company to the foreign players - reverse charge mechanism - payments made to foreign service provider for management consultancy services - costs incurred in marketing and PR activities outside India - 90% of payments made by Franchisee company to the foreign players - 100% of payments by the company to foreign coaches and support staff. Whether receipt of the Appellant-assessee s share in the Central Rights Income is consideration for the alleged services rendered to BCCI-IPL in organizing the IPL tournament, and taxable as Business Support Services (BSS)? - HELD THAT - The Tribunal by relying upon the decision of the Tribunal in the case of MORMUGAO PORT TRUST VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, GOA- (VICE-VERSA) 2016 (11) TMI 520 - CESTAT MUMBAI has set aside the demand holding that in case of joint venture contract, there is neither an intention to render a service to the other partner(s) nor is there any fixed consideration quid pro quo for any particular service of a partner. It has further been held that a contractor-contractee or the principal-client relationship, which is the essential element of any taxable service, is absent in the case of the partners or co-venturers in a joint venture agreement - In the present case, since the demand of Rs.16,71,71,797/- in respect of Central Rights Income arising out of the franchise agreement cannot be considered as provision of any service between the members to the franchise agreement, such demand cannot be confirmed on the assessee-appellants. Whether 10% of the payments made by Franchisee Company to the foreign players is taxable under the reverse charge mechanism (RCM) as BSS on the basis that the players carry out promotional activities (incl. wearing uniforms with logos, etc.)? - HELD THAT - The said issue has already been dealt with by the Co-ordinate Bench of this Tribunal, in the case of SOURAV GANGULY VERSUS COMMISSIONER OF SERVICE TAX, KOLKATA (NOW COMMISSIONER OF CENTRAL GOODS SERVICE TAX CENTRAL EXCISE, KOLKATA SOUTH) 2020 (12) TMI 534 - CESTAT KOLKATA , wherein it was held that the view taken by the commissioner is not correct as the players had received the fees for the purpose of playing cricket only and even otherwise, it is a settled principle of law that if no machinery provision exists to exclude non-taxable service (playing cricket) from a composite contract, the same is not taxable since law must provide a measure or value of the rate to be applied and any vagueness in the legislative scheme makes the levy fatal. Thus, the Tribunal held in this case that the confirmation of demand could not be sustained - Considering that the ratio of the above decision squarely applies to the present case in hand, it is held that the confirmation of demand Rs.47,55,082/- towards fees paid to foreign players on RCM basis and Rs. 20,13,565/- to the agents of foreign players are not sustainable. Whether payments made to foreign service provider for management consultancy services are taxable under RCM under taxing entry for Management or Business Consultant s Service? - HELD THAT - The said issue has already been dealt with by the Hon ble Supreme Court, in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. 2018 (3) TMI 357 - SUPREME COURT . Upon consideration of such issue, the Hon ble Apex Court while dismissing the Revenue s appeal had observed only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax. In the present case, the disputed period for which demands were raised relate to 2008-2009 and 2011-2012, much prior to the amendment to Section 67 introduced w.e.f. 14.05.2015. Hence, the confirmation of demand for Rs.38,31,865/- in respect of reimbursable expenses to foreign service provider on RCM basis cannot be considered as there exists no legal provision for charging to service tax on such reimbursement charges, we are of the view that such demand cannot be confirmed on the assessee-appellants. Whether costs incurred in marketing and PR activities outside India is taxable under the taxable service for BSS, on RCM? - HELD THAT - The identical issue was considered by the Co-ordinate Bench of this Tribunal, in the case of KPH DREAM CRICKET PVT. LTD. VERSUS CCE ST, CHANDIGARH-I (VICE-VERSA) 2019 (5) TMI 1171 - CESTAT CHANDIGARH . Upon consideration of such issue, the Tribunal had held that the main object of the appellant-assessee is to promote game of cricket in India through IPL tournaments. For obtaining service of organizing the said tournaments cannot be treated a service is in nature of Business Support Service. Therefore, no service tax is leviable under the category of Business Support Service as discussed hence the demand of service tax is not sustainable - As the present case is identical in the factual matrix to the above case already decided by the Tribunal, there exists no ground to deviate from the above stand - the confirmation of demand Rs.11,24,636/- towards service tax liability on marketing and Public Relations activities conducted outside India paid to foreign vendors on RCM basis is not sustainable. Whether the appellants-assessee is required to reverse common CENVAT Credit availed for providing taxable and exempt output service? - HELD THAT - The issue has already been examined by Co-ordinate Bench of this Tribunal, in the case of CCE ST, CHENNAI VERSUS L. BALAJI, S. BADRINATH, DINESH KARTHICK, MURALI VIJAY, VIDYUT SIVARAMAKRISHNAN, ANIRUDA SRIKKANTH, SURESH KUMAR, YO MAHESH, HEMANG BADANI, ASHWIN R,C. GANAPATHY, ARUN KARTHIK KB, KAUSHIK GANDHI, PALANI AMARNATH C, ABHINAV MUKUND (VICE-VERSA) 2019 (5) TMI 377 - CESTAT CHENNAI . Upon consideration of such issue, the Tribunal had held that no Cenvat credit is required to be reversed - the Tribunal held that the demand of service tax is not sustainable against the appellants. The explanation 3 to Rule 6(1) of the Cenvat Credit Rules, 2004 was amended vide notification No. 13/2016-C.E. (NT) dated 01.03.2016, wherein the exempted service was expanded to include an activity which is not a service as defined under Section 65B (44) of the Finance Act, 1994 w.e.f. 01.04.2016, for which reversal of cenvat credit is required. Hence, prior to this there was no legal requirement legally binding an assessee to reverse cenvat credit of inputs or inputs services taken on such activities which are not services under the scope of the said Finance Act, 1994 - the confirmation of demand Rs.2,13,57,472/- towards common Cenvat credit reversal is not sustainable. Whether 90% of payments made by Franchisee company to the foreign players is taxable under RCM as BSS on the basis that they carry out promotional activities (incl. wearing uniforms with logos, etc.)? - HELD THAT - The issue has been addressed in a number of cases earlier by Co-ordinate Benches of the Tribunal and in the case of M/s KPH Dream Cricket Pvt. Ltd. it was clearly held that the main activity of players, who were engaged under a contract by the appellants-assessee, is to play cricket apart from engagement of promotional activities which are ancillary to the main activity of playing cricket. On drawing support from various decisions held in favour of the appellants-assessee, the Tribunal held in this case that on player s fee, no service tax is payable and upheld the decision of the Commissioner in rightly dropping the demand of service tax on player s fees - the instant case is covered by the decision of the Tribunal in the above case, and thus there are no merit for interfering with the decision of the learned Principal Commissioner in dropping the demand of service tax in the impugned order. Whether 100% of payments by the company to foreign coaches and support staff is taxable under RCM as BSS on the basis that they carry out promotional activities? - HELD THAT - The issue has already been addressed in detail in the impugned order by the learned Principal Commissioner concluding that the activity of coaches and also support staff clearly stands out distinctly different as coaching service provided in relation to sports and is not covered Business Support Service; further he concluded there exists a specific category for levying such category of services, i.e., commercial training or coaching centre . However, as the coaching in the filed of sports has been specifically excluded from the applicability of service tax vide the definition of commercial training or coaching centre under section 65(27) of the Finance Act, 1994, and as the service of coaching is not provided by an centre but an individual coach and support staff, he concluded that the service tax is not chargeable on such activity - there is no ground for interfering with the order of the learned Principal Commissioner. Thus the demand of service tax on this issue is not sustainable and appeal made by the Revenue does not survive. Appeal disposed off.

Summary

Issues Involved:
1. Taxability of Central Rights Income as Business Support Services (BSS).
2. Service tax applicability on payments to foreign players under Reverse Charge Mechanism (RCM).
3. Service tax on payments to foreign service providers for management consultancy services under RCM.
4. Taxability of costs incurred in marketing and PR activities outside India under BSS.
5. Reversal of common CENVAT Credit for taxable and exempt output services.
6. Taxability of 90% of payments to foreign players under RCM as BSS.
7. Taxability of 100% of payments to foreign coaches and support staff under RCM as BSS.

Summary:
1. Central Rights Income as BSS:
The Tribunal held that the Central Rights Income from BCCI cannot be considered as consideration for Business Support Services. It was determined that there is no contractor-contractee relationship in joint ventures, and thus, the demand of Rs.16,71,71,797/- was set aside.

2. Payments to Foreign Players under RCM:
The Tribunal found that the fees paid to foreign players are for playing cricket and not for promotional activities. Relying on the Sourav Ganguly case, the Tribunal held that the service tax demand of Rs.47,55,082/- on 10% of the fees and Rs.20,13,565/- to players' agents is not sustainable.

3. Management Consultancy Services under RCM:
The Tribunal referred to the Supreme Court decision in Intercontinental Consultants and Technocrats Pvt. Ltd., ruling that reimbursable expenses cannot be included in the valuation of taxable services. Consequently, the service tax demand of Rs.38,31,865/- was set aside.

4. Marketing and PR Activities Outside India:
The Tribunal held that costs incurred for marketing and PR activities outside India are not taxable under BSS, following the precedent set in KPH Dream Cricket Pvt. Ltd. The demand of Rs.11,24,636/- was thus not sustainable.

5. Reversal of Common CENVAT Credit:
The Tribunal ruled that the reversal of common CENVAT Credit for stadium gate receipts, prize money, and in-stadia sales is not required. It was noted that prior to the amendment in 2016, there was no legal requirement to reverse CENVAT Credit for activities not considered services. The demand of Rs.2,13,57,472/- was set aside.

6. 90% Payments to Foreign Players under RCM:
The Tribunal upheld the Principal Commissioner's decision to drop the demand, stating that the primary activity of the players is playing cricket, and promotional activities are ancillary. The Tribunal found no merit in the Revenue's appeal.

7. 100% Payments to Foreign Coaches and Support Staff under RCM:
The Tribunal agreed with the Principal Commissioner that coaching services are distinct and not covered under BSS. As sports coaching is exempt, the service tax demand on these fees was not sustainable. The Revenue's appeal was dismissed.

Conclusion:
The Tribunal set aside the demands confirmed by the Principal Commissioner of Service Tax, Mumbai-IV, and allowed the appeal filed by the appellants-assessee. The Revenue's appeal was dismissed for lack of merit. Both appeals were disposed of accordingly, and the cross-objection filed by the appellant-assessee was also disposed of.