2024 (2) TMI 253 - AT - Service Tax

Classification of services - sponsorship service or not - sponsorship fee paid by the appellant to M/s. JIPL towards grant of associate sponsorship rights of IPL team Rajasthan Royals for the IPL Season 3 (2010) - allegation in the Show Cause Notice is that the exclusion provided in Section 65 (105)(zzzn) is not available to the appellant as the sponsorship is for a sports team and not a sports event. HELD THAT - The very same issue was considered by the Tribunal in the case of M/S HERO MOTOCORP LTD VERSUS COMMISSIONER OF SERVICE TAX, DELHI 2013 (6) TMI 447 - CESTAT NEW DELHI wherein it was held that the expression in relation to sports event has an extensive connotation and the sponsorship of a team of IPL has to be considered as sponsorship of sports event itself. The said decision has been upheld by the Hon ble Supreme Court in COMMISSIONER VERSUS HERO MOTOCORP LIMITED 2015 (7) TMI 1163 - SC ORDER wherein the appeal filed by department was dismissed both on the ground of delay as well as being devoid of any merit. The impugned order is set aside - The appeal is allowed.

Summary

Issues Involved:
1. Whether the sponsorship fee paid by the appellant to M/s. JIPL for associate sponsorship rights of IPL team Rajasthan Royals is taxable under the category of sponsorship service.
2. Applicability of the exclusion clause under Section 65(105)(zzzn) of the Finance Act, 1994, for sponsorship of sports events.

Summary:

Issue 1: Taxability of Sponsorship Fee
The appellant, engaged in providing taxable services, entered into a memorandum of understanding with M/s. Jaipur IPL Cricket Pvt. Ltd. (JIPL) on 14.11.2009, granting them associate sponsorship rights for IPL Season 3 (2010). The department issued a Show Cause Notice dated 16.05.2013, for the period November 2009 to April 2010, proposing to demand Service tax under the category of sponsorship service along with interest and penalties. The Original Authority confirmed the demand, which was upheld by the Commissioner (Appeals). The appellant contended that the sponsorship was for a sports event, thus falling under the exclusion clause.

Issue 2: Exclusion Clause Applicability
Section 65(105)(zzzn) of the Finance Act, 1994, excludes services in relation to sponsorship of sports events from taxable services. The appellant argued that the entire demand period was prior to the amendment effective from 01.07.2010, which withdrew this exclusion. The Tribunal's decision in Hero Motorcorp Ltd. Vs. Commissioner of Service Tax, Delhi, held that sponsorship of an IPL team qualifies as sponsorship of a sports event due to the extensive connotation of "in relation to." This interpretation was upheld by the Hon'ble Supreme Court in Commissioner Vs. Hero Motorcorp Ltd.

Tribunal's Findings:
The Tribunal, after hearing both sides and reviewing the evidence, concluded that the sponsorship of the Rajasthan Royals team for IPL Season 3 falls under the exclusion clause for sports events. The Tribunal followed the precedent set in Hero Motorcorp Ltd., which was affirmed by the Supreme Court, and held that the demand for service tax was unsustainable.

Conclusion:
The impugned order was set aside, and the appeal was allowed with consequential reliefs. The Tribunal pronounced that the appellant is not liable for service tax under Section 65(105)(zzzn) for the period in question.