2025 (3) TMI 842 - AT - Service Tax

Levy of Service Tax on the appellant share in the Central Rights Income CLT20 Participation Fees and prize money received from BCCI-IPL in organizing the IPL tournament under Business Support Services (BSS) - Levy of Service Tax on Support Services of Business provided by overseas cricket professionals under reverse change mechanism for wearing apparel taking part in endorsements and other activities under Business Support Services (BSS) - Levy of Service Tax on player release fees paid to Cricket Australia under reverse charge mechanism under manpower Recruitment or Supply Agency Services - Levy of Service Tax on player transfer fee received from other franchisees under Manpower Recruitment or Supply Agency Services - time limitation Levy of Service Tax on the appellant share in the Central Rights Income CLT20 Participation Fees and prize money received from BCCI-IPL in organizing the IPL tournament under Business Support Services (BSS) - HELD THAT - This Tribunal in the case of KNIGHT RIDERS SPORTS PVT. LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 4 (2) MUMBAI CHIEF COMMISSIONER OF INCOME-TAX (CENTRAL) 2 MUMBAI THE UNION OF INDIA 2023 (6) TMI 1161 - CESTAT MUMBAI held that 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 we are of the view that such demand cannot be confirmed on the assessee-appellants. - The demand for service tax on this income was set aside. Levy of Service Tax on Support Services of Business provided by overseas cricket professionals under reverse change mechanism for wearing apparel taking part in endorsements and other activities under Business Support Services (BSS) - HELD THAT - The Tribunal in Kinight Rider Sports Private Limited 2023 (6) TMI 1161 - CESTAT MUMBAI held the said issue has already been dealt with by the Co-ordinate Bench of this Tribunal in the case of Sourav Ganguly v. 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. - the demand is set aside. Levy of Service Tax on player release fees paid to Cricket Australia under reverse charge mechanism under manpower Recruitment or Supply Agency Services - HELD THAT - The core requirement that the service which is provided or to be provided must be by a manpower recruitment or supply agency has been missed. Moreover such a service has to be in relation to the supply of manpower. The appellant paid player release fees to CrKPH DREAM CRICKET PVT. LTD. VERSUS CCE ST CHANDIGARH-I (VICE-VERSA) 2019 (5) TMI 1171 - CESTAT CHANDIGARH 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. - the demand is set aside. Levy of Service Tax on player transfer fee received from other franchisees under Manpower Recruitment or Supply Agency Services - HELD THAT - The issue is no more res-integra as the Tribunal in KPH Dream Cricket held that 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. Time limitation - HELD THAT - A Perusal of the facts reveal that the appellant had disclosed all relevant facts and Department was well aware of the receipts on which the appellant was not paying service tax and reasons for the same. Therefore the averments and findings that department became aware because of audit or that the Appellant suppressed any facts is incorrect. Consequently we hold that the demand is also barred by limitation. Conclusion - i) The income from Central Rights under a franchise agreement does not constitute Business Support Services. ii) Payments to players for promotional activities when primarily engaged for playing cricket are not taxable under Business Support Services. iii) Player release fees to cricket boards and player transfer fees are not taxable under Manpower Recruitment or Supply Agency Services. iv) The demand for service tax was barred by limitation due to the department s prior knowledge of the appellant s transactions. Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in the judgment include:

Whether the appellant's share in Central Rights Income, CLT20 Participation Fees, and prize money received from BCCI-IPL is liable to service tax under 'Business Support Services'.
Whether service tax is applicable on support services provided by overseas cricket professionals under the reverse charge mechanism.
Whether player release fees paid to Cricket Australia under the reverse charge mechanism are taxable under 'Manpower Recruitment or Supply Agency Services'.
Whether player transfer fees received from other franchisees are taxable under 'Manpower Recruitment or Supply Agency Services'.
Whether the demand for service tax is barred by limitation.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Service Tax on Central Rights Income, CLT20 Participation Fees, and Prize Money

Relevant Legal Framework and Precedents: The Tribunal relied on previous decisions, including KPH Dream Cricket Pvt. Ltd. vs. CCE & ST, Chandigarh, which established that income from Central Rights under a franchise agreement does not constitute a provision of service between franchise agreement members.
Court's Interpretation and Reasoning: The Tribunal found that the relationship between the franchisees and BCCI-IPL is not that of a service provider and client but rather a joint venture. As such, the income from Central Rights could not be considered as Business Support Services.
Application of Law to Facts: The Tribunal concluded that the appellant's share in Central Rights Income, CLT20 Participation Fees, and prize money is not subject to service tax under Business Support Services.
Conclusions: The demand for service tax on this income was set aside.

Issue 2: Service Tax on Support Services Provided by Overseas Players

Relevant Legal Framework and Precedents: The Tribunal referred to the decision in Knight Riders Sports Private Limited, which held that payments to players for promotional activities were not taxable as Business Support Services.
Court's Interpretation and Reasoning: The Tribunal found that the players were engaged primarily for playing cricket, and any promotional activities were incidental. The lack of a clear machinery provision to exclude non-taxable services from a composite contract rendered the demand unsustainable.
Application of Law to Facts: The Tribunal determined that the service tax demand for support services provided by overseas players was not sustainable.
Conclusions: The demand was set aside.

Issue 3: Service Tax on Player Release Fees

Relevant Legal Framework and Precedents: The Tribunal referenced KPH Dream Cricket Private Limited, which clarified that payments to cricket boards for player releases do not constitute Manpower Recruitment or Supply Agency Services.
Court's Interpretation and Reasoning: The Tribunal concluded that the essence of the agreement was not the supply of manpower, and the players were not employees of the cricket boards.
Application of Law to Facts: The Tribunal found that the player release fees paid to Cricket Australia were not subject to service tax under the specified category.
Conclusions: The demand was set aside.

Issue 4: Service Tax on Player Transfer Fees

Relevant Legal Framework and Precedents: The Tribunal cited KPH Dream Cricket, which held that player transfer fees do not fall under Manpower Recruitment or Supply Agency Services.
Court's Interpretation and Reasoning: The Tribunal emphasized that the appellant's principal business was not manpower recruitment, and the transfer of players did not constitute such a service.
Application of Law to Facts: The Tribunal determined that the player transfer fees were not taxable under the specified service category.
Conclusions: The demand was set aside.

Issue 5: Limitation

Relevant Legal Framework and Precedents: The Tribunal considered the statutory limitation period for issuing a show cause notice under Section 73 of the Finance Act, 1994.
Court's Interpretation and Reasoning: The Tribunal found that the department was aware of the appellant's transactions and had been regularly informed, negating any claim of suppression of facts.
Application of Law to Facts: The Tribunal concluded that the demand was barred by limitation.
Conclusions: The demand was set aside.

3. SIGNIFICANT HOLDINGS

The Tribunal held that income from Central Rights under a franchise agreement does not constitute Business Support Services.
Payments to players for promotional activities, when primarily engaged for playing cricket, are not taxable under Business Support Services.
Player release fees to cricket boards and player transfer fees are not taxable under Manpower Recruitment or Supply Agency Services.
The demand for service tax was barred by limitation due to the department's prior knowledge of the appellant's transactions.
The appeal was allowed, and the impugned order was set aside.

← Previous Next →