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2019 (5) TMI 1171 - AT - Service TaxClassification of services - Franchise service or Business Support services - demand of service tax on Central Rights Income - Revenue Sharing basis - case of the Revenue is that the appellant-assessee is having franchise relationship and by way of maintaining a team is supporting business of BCCI in IPL tournament - HELD THAT - In the case of Sir Ganga Ram Hospital 2017 (12) TMI 509 - CESTAT NEW DELHI , wherein it was held that if there is Revenue sharing by the doctors wherein some part of fees retained by the hospital and some is given to the doctor, the same cannot be taxed under Business support services - thus the appellant-assessee is not providing any Business Support Service. Also, BCCI is not commercial organization and only organizing game of cricket. Therefore any service rendered to BCCI-IPL is not in the nature of support of business of BCCI. Therefore, on that ground also; no service tax is payable by the appellant-assessee. Thus, on central rights income, no service tax is payable by the appellant-assessee - demand set aside. Classification of services - fee paid to overseas players - classified under the head Business Support Service or not? - HELD THAT - The main activity of the appellant-assessee is to play cricket apart from that, the appellant-assessee are engaged in the promotional activities which are ancillary to the main activity of playing cricket - In the case of Sourav Ganguly 2016 (7) TMI 237 - CALCUTTA HIGH COURT it was held that the remuneration received by the petitioner from the IPL franchisee could not be taxed under business support service - thus on player s fee, no service tax is payable by the appellant-assessee - demand set aside. Classification of service - player transfer fees - classified under the category of manpower recruitment or supply agency services? - HELD THAT - The prime activity of the appellant is that they are engaged in the activity of organizing the cricket tournament and manpower recruitment or supply agency service is not the principal business of the appellant-assessee. Therefore, the service tax cannot be demanded under the category of manpower recruitment or supply agency service for transfer of player to another team as held by the of Hon ble Gujarat High Court in the case Arvind Mills Limited 2014 (4) TMI 132 - GUJARAT HIGH COURT - As the main activity of the appellant-assessee to play cricket, therefore, no service tax is payable by the appellant-assessee under the category of Manpower Recruitment or Supply Agency service for transfer of player fee - demand set aside. Classification of services - appellant-assessee entered into an agreement with Emirates, Dubai for granting the sponsorship rights of the cricket team of the appellant to Emirates - sponsorship service or not? - demand was confirmed on this account on the ground that the Emirates had invested money for the promotion of his own brand and not the sports event, that profit is being generated through this activity and that Emirates did not sponsor the sporting event and therefore, the exclusion under the sponsorship service is not available to them - HELD THAT - We have gone through the definition of sponsorship service. As per definition, it does not include services in relation to sponsorship of sports events and IPL is a sport event as held by this Tribunal in the case of DLF Ltd. 2012 (5) TMI 404 - CESTAT, NEW DELHI - as per CBEC circular No.334/1/2010 dt.26.2.2010, the exclusion clause is available for sponsorship services pertaining to sports events was withdrawn and the period involved in this case is prior to that, in that circumstance, the demand under the category of sponsorship service is not sustainable - demand set aside. Classification of services - player release fee paid to overseas cricket board - classified under manpower recruitment or supply agency service or not? - Reverse charge mechanism - HELD THAT - Neither cricket board nor the appellant-assessee are engaged in providing Manpower Recruitment or Supply Agency Service of employees. Therefore, no service tax is payable by the appellant-assessee - demand set aside. Classification of service - amount paid to overseas agency - classified under Business Auxiliary Service or not? - HELD THAT - The appellant-assessee entered into agreement with the overseas agencies for holding negotiations with overseas players as regards arrangement with IPL, which were undertaken outside India and for that activity, the amount has been paid to the overseas agencies. Such amount has been paid by the appellant-assessee for arranging player, who has to play cricket in IPL tournament and as per section 65 (19) of Finance Act, 1994 definition of business auxiliary service, the service tax is required to be paid for promotion or marketing or sale of goods produced or provided by or belonging to the client or promotion or marketing of service provided by the client - Admittedly, organizing sport event is neither any service nor any goods, therefore, the said amount paid on account of negotiations cannot be qualified as Business Auxiliary Service under section 65 (19) of Finance Act, 1994 - demand set aside. Classification of services - amount paid to African Earth Events - classified under the category of Business Support Service or not? - HELD THAT - In this case, 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 - demand set aside. CENVAT Credit - taxable as well as exempted services - gate receipts collected by the appellant-assessee terming it that they have provided any exempted service - Rule 6 (3) (i) of Cenvat Credit Rules, 2004 - HELD THAT - The amount has been received by the appellant as the sale of ticket for cricket tournament which is not service, therefore, when it is not the service, it cannot be termed as service, no service tax is required to be reversed. Further, for the period 2010-12, the appellant-assessee has also reversed the said amount, therefore, no demand is sustainable on that account - the demands of service tax are not sustainable against the appellant- assessee. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Demand of service tax on Central Rights Income. 2. Demand of service tax on fee paid to overseas players. 3. Demand of service tax on player transfer fees under the category of manpower recruitment or supply agency services. 4. Demand of service tax on the amount received as sponsorship service. 5. Demand of service tax on player release fee paid to overseas cricket board under the category of manpower recruitment or supply agency service. 6. Demand of service tax on the amount paid to overseas agency under the category of Business Auxiliary Service. 7. Demand of service tax on the amount paid to African Earth Events under the category of Business Support Service. 8. Demand of service tax in terms of Rule 6 (3) (i) of Cenvat Credit Rules, 2004 on gate receipts. Detailed Analysis: 1. Demand of Service Tax on Central Rights Income: The Revenue argued that the appellant-assessee, by maintaining a team, supported BCCI's business in the IPL tournament, thus liable for service tax under Business Support Service (BSS). The appellant contended that their relationship with BCCI-IPL was a co-venture based on revenue sharing, not a service provision. The Tribunal agreed, citing the decision in Mormugao Port Trust vs. CCE, which held that activities undertaken by a partner for mutual benefit in a joint venture cannot be considered a taxable service. Additionally, BCCI was deemed not engaged in business or commerce but in promoting cricket, as supported by the Rajasthan Cricket Association case. Therefore, no service tax was payable on Central Rights Income. 2. Demand of Service Tax on Fee Paid to Overseas Players: The Revenue sought service tax under BSS for fees paid to overseas players. The appellant argued that players were primarily engaged in playing cricket, with promotional activities being ancillary. The Tribunal referred to Sourav Ganguly vs. Union of India, where it was held that a professional cricketer engaged by a franchisee was not providing a taxable service. The Tribunal concluded that the main activity was playing cricket, and thus, no service tax was payable on the players' fees. 3. Demand of Service Tax on Player Transfer Fees: The Revenue demanded service tax under Manpower Recruitment or Supply Agency Service for fees received from transferring a player to another team. The appellant argued that they did not supply manpower but transferred a player who no longer played for them. The Tribunal, citing CST vs. Arvind Mills Limited, held that the appellant’s primary activity was organizing cricket tournaments, not manpower supply. Therefore, no service tax was payable on player transfer fees. 4. Demand of Service Tax on Sponsorship Service: The appellant entered into a sponsorship agreement with Emirates, Dubai. The Revenue argued that the sponsorship was for promoting Emirates' brand, not a sports event. The appellant contended that IPL was a sports event, and sponsorship of such events was excluded from service tax. The Tribunal agreed, referencing the DLF Ltd. case, which recognized IPL as a sports event, and the CBEC circular confirming the exclusion for sports event sponsorships before its withdrawal in 2010. Thus, no service tax was payable on sponsorship services. 5. Demand of Service Tax on Player Release Fee: The appellant paid fees to overseas cricket boards for player releases, which the Revenue taxed under Manpower Recruitment or Supply Agency Service. The appellant argued that the cricket boards were not engaged in manpower supply. The Tribunal, referencing the Arvind Mills Ltd. case, held that neither the cricket boards nor the appellant provided manpower supply services. Therefore, no service tax was payable on player release fees. 6. Demand of Service Tax on Amount Paid to Overseas Agency: The Revenue demanded service tax under Business Auxiliary Service for payments to overseas agencies for negotiating with players. The appellant argued that these activities did not fall under Business Auxiliary Service as they were not promoting or marketing goods or services. The Tribunal agreed, noting that organizing a sports event is neither a service nor goods promotion. Thus, no service tax was payable on these payments. 7. Demand of Service Tax on Amount Paid to African Earth Events: The appellant paid African Earth Events for logistical, PR, and marketing services, which the Revenue taxed under Business Support Service. The appellant argued that these services were for promoting cricket, not business support. The Tribunal concluded that organizing cricket tournaments was not a business activity and thus not taxable under Business Support Service. 8. Demand of Service Tax on Gate Receipts: The Revenue sought to reverse Cenvat credit on gate receipts, considering them exempt services. The appellant argued that ticket sales were not services. The Tribunal agreed, stating that ticket sales were not services and thus not subject to service tax or Cenvat credit reversal. Conclusion: The Tribunal set aside the demands of service tax against the appellant-assessee, allowing their appeals. The Revenue's appeal was dismissed.
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