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TMI BlogFees received by the cricket players from IPL team owners is not ‘Business Support Service’X X X X Extracts X X X X X X X X Extracts X X X X ..... Fees received by the cricket players from IPL team owners is not ‘Business Support Service’ - By: - CA Bimal Jain - Service Tax - Dated:- 25-2-2023 - - The CESTAT, Ahmedabad in YUSUFKHAN M PATHAN AND IRFANKHAN PATHAN VERSUS C.C.E. S.T. -VADODARA-II - 2023 (1) TMI 938 - CESTAT AHMEDABAD Set aside the order demanding Service Tax on the fees paid to cricketers. Held that, the fees received by the international cricket players from cricket team owners, whereby, they were employed to play for the respective teams in terms of the contract in Indian Premium League ( IPL ) seasons, would not come under the head of Business Support Services . Further held that, playing cricket is the primary reason for which IPL was formed and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... promotional activities are ancillary to the main purpose that of playing cricket. Facts: Yusuf khan M Pathan and Irfan Khan Pathan ( the Appellants ) are international cricket players, who had entered into contract with the cricket team owners ( Franchisee ) whereby, they were employed to play cricket for the respective teams in terms of the contracts for IPL seasons. The Revenue Department ( the Respondent ) was of the view that, the fees paid to the Appellants is liable to Service Tax under the service category of Business Support Service , on the ground that Appellants wear the team clothing which bears the brands/ marks of various sponsors and they are also required to participate in promotional events of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Franchisee. Subsequently, the Show Cause Notices ( SCNs ) were issued to the Appellants for demand of Service Tax and thereafter, the Respondent confirmed the Service Tax demand along with interest and imposed the penalties on Appellants. Being aggrieved, an appeal was filed before the Commissioner (Appeals) which vide Orders-in-Appeal dated December 14, 2011 ( the Impugned Orders ) rejected the appeal of Appellants and upheld the order of the Respondent. Hence, this appeal is filed. The Appellants submitted that the agreement between the Appellants and Franchisee is an agreement of employment since the Appellants are employed by the Franchisee upon specified remuneration and benefit and wearing the Franchisee s colours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and design of cricket clothing, including marks and logos, is also part of employment agreement and it cannot be construed as promotional activities. Further, the Appellants undertakes to grant all rights to use their identity including his photographs to the Franchisee therefore, the Appellants were not the ones endorsing/promoting any person/product/ service, but it was only the Franchisee who was doing so. Issue: Whether the activity carried out by the Appellants would be liable to Service Tax under Business Support Service ? Held: The CESTAT, Ahmedabad in YUSUFKHAN M PATHAN AND IRFANKHAN PATHAN VERSUS C.C.E. S.T. -VADODARA-II - 2023 (1) TMI 938 - CESTAT AHMEDABAD held as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Noted that, though in the Impugned Order the Appellants were made liable to pay Service Tax under the Business Support Services but, no specific entry has been shown to be applicable to levy service tax as mentioned in the definition of Business Support service under Section 65(104c) of the Finance Act, 1994 ( the Finance Act ). Further noted that, the Appellants undertakes to grant franchisee all rights to use the identity of the Appellants including photographs. Films and TV appearances and its identification and these right are given by a player to the Franchisee during the tenure of the contract and thereafter, the Appellants will not claim endorsement of any products or goods or services of any sponsors in its name. Obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved that, the Appellants were not rendering any services which could be classified as Business Support Services , as they are not promoting any particular brand or product or service and also not taking part in any business activity of promoting the sale of any product or service of any entity. Opined that, playing cricket is the primary reason for which IPL was formed and promotional activities are ancillary to the main purpose that of playing cricket. Stated that, the entry for Business Support Service envisages taxing activities which are needed for doing business activities, almost in the nature of outsourcing of activities connected with business and it does not specifically cover the activity done by Appellants. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that, the agreement is abundantly clear, that a person who has earned the reputation and recognition as a player, is employed by the franchisee and the Appellants have been appointed/ engaged by the respective Franchisee under the agreement of employment . Set aside the Impugned Order. Held that, the Appellants are not liable to service tax under the Business Support Service and therefore, the demands of service tax are not sustainable against the Appellants. Relevant Provisions: Section 65(104c) of the Finance Act : support services of business or commerce means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, operational or administrative assistance in any manner, formulation of customer service and pricing policies, infrastructural support services and other transaction processing. Explanation For the purposes of this clause, the expression infrastructural support services includes providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security (Author can be reached at [email protected] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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