2013 (11) TMI 1308 - AT - Service Tax

Service Tax on Profit sharing agreement - Demand of Service tax on account of business support services provided to BCCI-IPL Held that - this is a case where both the contracting parties pool resources and do their part of the activities and take risks of uncertain income and hence prima facie we are of the view that there is no service given by one party to another. Since substantial part of Revenue from the activity is received centrally in the hands of BCCI it is shared with other participants like applicant. Prima facie such routing of payments cannot be sufficient proof of provision of service by the applicant to BCCI - prima facie demand is not maintainable because they were not providing any services to the BCCI-IPL and the whole activity is carried out on the basis of profit sharing agreement between the appellants and BCCI-IPL. Deposit of ₹ 4.23 crores made by applicant is sufficient for the admission of the appeal. So we waive the requirement of predeposit of balances dues for admission of appeal and there shall be stay on its collection during the pendency of the appeal - Stay granted.

Summary

Issues:
Stay petitions in two appeals arising from the same impugned order regarding service tax disputes on revenue share, payments to foreign players and support staff, sale of space, and excess Cenvat credit.

Analysis:
1. The applicant, a franchisee of BCCI for organizing IPL matches, disputes service tax on various amounts received and paid. The major dispute concerns revenue share from BCCI, with the applicant arguing it's not a service but a joint business arrangement with shared resources and risks. The Tribunal agrees, citing precedents, and grants stay without pre-deposit on this issue.

2. Regarding payments to foreign players and support staff, the demand is under reverse charge, with service tax paid on support staff but not on players. The applicant argues the player payments are for playing matches, akin to employer-employee relationship. No service tax liability is found on this issue.

3. The sale of space for advertisement is contested, with the applicant claiming it's sponsorship, not sale of space. The change in tax law is highlighted, but the Tribunal finds no tax liability on this issue.

4. Excess Cenvat credit demand is linked to input tax credit on franchise services, with a dispute over the value of exempted services like ticket sales. The applicant argues ticket sales are not a service but subject to state entertainment tax. The Tribunal agrees, finding no need to reverse credit for exempted services.

5. The Revenue argues for taxability on all issues, emphasizing the business support provided by the applicant to BCCI. However, the Tribunal finds in favor of the applicant on major issues, granting stay without further pre-deposit and waiving the balance dues for appeal admission.

6. The judgment concludes that the applicant's joint business arrangement with BCCI does not constitute a service, and the pre-deposit made is sufficient for appeal admission. Stay on collection of balance dues is granted during the appeal's pendency, and the stay applications are allowed.

This comprehensive analysis covers the key legal issues and arguments presented in the judgment, detailing the Tribunal's findings and decisions on each disputed matter.