9911796707
TMI Blog2025 (3) TMI 842X X X X Extracts X X X X X X X X Extracts X X X X ..... urnament 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. X X X X Extracts X X X X X X X X Extracts X X X X ..... ies. Under the Franchisee Agreement, the Appellant was required to engage players (both Indian and Foreign) as part of its cricket team for playing cricket. For engaging a foreign player, adequate permission had to be obtained from the respective overseas cricket board. The Appellant was required to make payments to overseas cricket board to engage these foreign players. The Appellant had discharged the service tax liability with effect from 01.07.2012 on amounts paid to overseas cricket board/body. Once the players were included in the team, they can be permanently transferred to other Franchisees for which the transferring Franchisee received a certain player transfer fee. Further, such transfers were allowed under the BCCI-IPL Regulations and by such transfer the team owner transferred all rights and obligations available in respect of any player in favour of other team owner. The transfer of players was not temporary but permanent and cannot be recalled by the transferor Franchisee. If the team owner is not satisfied with the performance of the player, he player can be offered for transfer. Such transfer is initiated by the team wanting to alienate a player and not the transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f service tax on player transfer fee under the category of manpower recruitment or supply agency service, Demand of service tax on the player release fee paid to overseas cricket board under the category of 'manpower recruitment or supply agency service'. 3.1 Learned counsel further submitted that the Commissioner has completely erred in understanding the facts of the present case holding that in the absence of the team created by the Appellant and other franchisees, BCCI IPL could not have held the league and generated revenue and what could have been managed by BCCI IPL, was outsourced to the Appellant. He submitted that the appellant, who is the Franchisee had paid Franchise Consideration under Clause-T of the Franchise Agreement and it is because of this agreement, that the Appellant has received a right to earn by participation in the IPL T20 League. He further submitted that the BCCI-IPL had paid applicable service tax on the consideration received from the Appellant towards Franchise Consideration. The Franchise Agreement had carved out a special category of Central Rights and these mean those of the rights relating to the league which are to be exploited by BCCI IP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... associating with the league marks/trademarks or logos relating to any team. The Ld. Commissioner had failed to understand that the BCCI-IPL acts as a custodian of the revenue received from these rights throughout the league matches and once the league is over, BCCI-IPL distributes the revenue among the Franchisee equally (after deducting the league expenses incurred by BCCI-IPL) and also on the basis of final league standing. In return, BCCI-IPL keeps a nominal share as per Clause 8 of the Franchise Agreement of the income as common custodian of the revenue earned from exploitation of Central Rights. Consequently, the income generated from Central Rights does not belong to BCCI-IPL and was the Appellant's income. Learned counsel further stated that from the inception of the T20 League, the income so generated from Central Rights is meant to be the Appellant's income, which although collected by BCCI-IPL, is later distributed to the Appellant along with other Franchisees. 3.3 Learned counsel for the appellant also submitted that the Commissioner had confirmed the demand on the participation fee without examining the submissions of the Appellant and without providing any fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -IPL successfully conducted the matches and generated the resultant revenue. In the Agreement itself, the activity to be undertaken by both the franchisee and the franchisor i.e. conducting of IPL Twenty 20 Cricket league has been termed as "Business" as per clause 9 wherein the words used are "Business undertakings" and "Relevant Business". Thus, the remuneration received by the franchisee from the "Central Rights" pool is for providing the aforesaid services which helped in generating the huge revenue to BCCI-IPL and as such appropriately covered under the category of "Support Services of Business and Commerce". 4.1 Learned Authorized Representative further contended that the appellant had contracted foreign players and made payments to such players in foreign currency and was not paying service tax on the above transactions. However, they started paying service tax on such transaction from April, 2011 onwards. Therefore, learned Authorized Representative contended that it was essential to go through the terms of these agreements to get an insight into the exact nature of these transactions. He also submitted that in terms of the Franchise Agreement, it was obligatory on part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities. Hence, he prayed that there was no infirmity in the impugned order. 5. We have heard the learned counsel for the appellant and the learned Authorized Representative for the Department and perused the case records. 6. The details of demand under various issues are as under:- Sr. No. Issue Amount 1. 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)] Rs. 18,66,21,879/- 2. 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),] Rs. 2,59,89,925/- 3 Service Tax on player release fees paid to Cricket Australia under reverse charge mechanism [under manpower Recruitment or Supply Agency Services] Rs. 56,38,220/- 4. Service Tax on player transfer fee received from other franchisees [under Manpower Recruitment or Supply Agency Services] Rs/ 34,51,002/- Total Rs. 22,17,01,026/- 7. We take up each issue for considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve the same is no more res-integra. The Tribunal in Kinight Rider Sports Private Limited (supra) held as follows:- "The second issue is with respect to payment of service tax under the taxable category of Business Support Service by the assessee-appellants in the capacity of recipient of service under Reverse Charge Mechanism (RCM). We note that it is not in dispute that the assessee-appellants have entered into an agreement with individual foreign players and other professionals as a franchisee, wherein they have engaged those players as a professional cricketer. The aforesaid agreement also provided for the players, to wear 'team clothing', to participate in media, sponsorship and the promotional activities of the franchisee. The learned Principal Commissioner in the impugned order had concluded that such activities of the players are in the nature of support service in marketing the franchisee's trademark/logo and thus contribute to the promotional activities. Accordingly, in terms of specific clause in the agreement Indicating 10% of the total fees being payable to the player, when he does not happen to play even a single match, thereby attributing this part of 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The said has been reverse charge mechanism on the amounts paid to these cricket boards. The said demand is unsustainable for the reason that the overseas cricket boards are not engaged in providing services in relation to supply of manpower, which should be the essence of the agreement. Further, the players are not employees of these cricket boards and are only registered with them. He has also relied on the C.B.E. & C. Circular No. 96/7/2007-S.T., dated 23-8-2007 to say that manpower should be contractually employed by manpower recruitment agency. He prayed that no service tax is payable under the category of 'Manpower Recruitment or Supply Agency Service'. 26. As discussed above, hereinabove, 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 as held by the Hon'ble Gujarat High Court in the case of Arvind Mills Ltd. (supra)." 10. The fourth issue relates to demand of service tax on transfer received from other franchisees on reverse charge mechanism as Manpower Recruitment or Supply Agency Service, we go on to note that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directly or indirectly in any manner for recruitment or supply of manpower temporarily or otherwise to a client, in the present case, the respondent cannot be said to be a commercial concern engaged in providing such specified services to a client. It is true that the definition is wide and would include any such activity where it is carried out either directly or indirectly supplying recruitment or manpower temporarily or otherwise. However, fundamentally recruitment of the agency being a commercial concern engaged in providing any such service to client would have to be satisfied. In the present case, facts are to the contrary." 18. 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." 11. We now take up the submissions on limitation. We note that a show cause notice under Section 73 can be issued only within a period of 18 months from the relevant date i.e. the date when the return is filed. The instant notice dated 23.04.2015 covers period from 2009-10 to 01.06.2012 and the date of filing returns i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng summary of the League matches involving the Appellant and list of service provider with the amount paid as on date with contact details, list of service receivers with the amount received by the Appellant, Details of misc. Income received, details of payment made to India & Foreign Player & Coaches. 3. 24.09.2008 Letter submitting details of Trial Balance as on 23.09.2008 & payment to Player & Coaches and details of TDS deducted upon such payment. 4. 11.01.2009 The Appellant vide letter dated 11.01.2009 submitted the details CENVAT Credit availed on inputs/input services in respect of collecting gate receipts for the matches organized by the Appellant. It was further clarified in the reply that the Appellant has not provided any other service apart from the services mentioned in letter dated 28.12.2009. It was further submitted that the Appellant is earning revenue from other activities which are not services namely, central media rights, sponsorship prizes, sale of tickets, miscellaneous income from renting of immovable property, player's transfer fees and interest income. 5. 29.01.2010 06.03.2010 08.02.2010 The Appellant vide letter d ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
