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TMI Blog2013 (6) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... ion; championship tournaments; celebrity events; website/blog entitlement; and marketing plans by GMR, clearly establish that the sponsorship is of the GMR owned Delhi Daredevils team in relation to its participation in the T-20 tournament. The sponsorship agreement is in our considered view a clear commercial transaction, the underlying purpose being the assumption that since BCCI-IPL-T-20 matches generate huge public viewership, either directly at the venues or through audio visual and print media as well, the appellant's association with the T-20 sports event through Delhi Daredevils team would show case the appellant's presence in its core business as a manufacturer of two wheeler motorbikes. The conclusion recorded by the adjudicating authority, is in our considered view based on a fundamental misconception of the purpose of the sponsorship agreement. The conclusion that under the agreement appellant sponsored GMR, by predicating this inference on the singular circumstance that GMR was other party to the agreement, overlooking the terms and conditions of the agreement, constitutes a fatal infirmity of analysis, which invalidates the adjudication order. The appellant i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating that the appellant's affiliation with Delhi Daredevils at a prime hoarding space at the Delhi Airport operated by GMR's Group Company; 4. Show cause notices were issued to the appellant on 09.03.2009, 21.09.2009 and 23.07.2010) alleging default in remitting service tax i.e. due in relation to sponsorship services; in view of provisions of Section 68(2) of the Finance Act, 1994 (the Act), read with Rule 2(1)(d)(vii) of the Service Tax Rules, 1994 (the Rules). 5. It is the admitted position that if service tax liability exists on the sponsorship service qua the agreement dated 14.05.2008 between the appellant and GMR, the appellant is liable to remit such tax. It is also admitted that the appellant has not remitted service tax. The show cause notice was to the effect that the appellant is liable to service fax under provision of Section 65(105)(zzzn) of the Act, which bring to charge in service or to be provided to anybody corporate or firm, by any person receiving sponsorship, in relation to such sponsorship, in any manner, but excluding services in relation to sponsorship of sports events. 6. The appellant responded to the show cause notice denying the liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough not a direct connection with a sporting event is contemplated by the exclusionary clause. 9. The adjudicating authority also relied on CBEC instructions dated 26.07.2010 which clarified that even prior to the Finance Act, 2010 (whereby the exclusionary clause was omitted) a participating team itself not being sport events, team sponsorship would fall outside the ambit of the exclusionary clause. Considering the Board circular, the adjudicating authority recorded that sponsorship of IPL is itself not sponsorship of any sport, since IPL is not an event but an entity of franchisee teams. On the same analogy, sponsorship of a team would not be sponsorship of a sports event and would therefore be taxable. 10. In our considered view the reasons recorded by the adjudicating authority are misconceived and unsustainable. Under the agreement with GMR the appellant had sponsored (for the relevant period) the Delhi Daredevils team which was owned by GMR (under a franchise agreement with BCCI/IPL Delhi Daredevils team was sponsored in the context of the participation of this team in the T-20 league matches. The several rights accruing to the appellant under the sponsorship agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther party to the agreement, overlooking the terms and conditions of the agreement, constitutes a fatal infirmity of analysis, which invalidates the adjudication order. 13. The relevant clauses of the relevant statutory provision [Section 65 (105) (zzzn)] (as it stood at the relevant time) reads Taxable service means any service provided or to be provided to any body corporate or firm, by any person receiving sponsorship, in relation to such sponsorship, in any manner, but does not include services in relation to sponsorship of sports events. Sponsorship is defined in Section 65(99a) of the Act and its essential ingredients are defined to include naming the evens after the sponsor, display the sponsor company logo or trade name, giving the sponsor exclusive or priority booking rights, and sponsoring prizes or trophies for competition but excluding any financial or other support in the form of donations or gifts given by the donors subject to the condition that the service provider is under no obligation to provide anything in return to such donor. The agreement in issue (between GMR and the appellant) clearly constitutes sponsorship. That is also the admitted position, since ..... X X X X Extracts X X X X X X X X Extracts X X X X
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