2012 (7) TMI 504 - AT - Service Tax

Franchisees of BCCI-IPL T-20 Cricket Tournament liable for service tax on various activities

M/s KPH DREAM CRICKET (P) LTD Versus CCE, CHANDIGARH

The Tribunal held that the franchisees of BCCI-IPL T-20 Cricket Tournament were liable for service tax on various activities and payments, including ... Service Tax on Profit sharing agreement - Demand of Service tax on account of business support services provided to BCCI-IPL – Held that:- prima facie demand is not maintainable because they were not providing any services to the BCCI-IPL and the whole activity is carried out on the basis of profit sharing agreement between the appellants and CCI-IPL. Payment made to players for business promotion activity - held that:- it will be sufficient to call for a deposit of Rs. 1 lakh on this account. Reversal in terms of Rule 6(3)(i) of the Cenvat Credit Rules for providing exempted services – Held that:– activity of organizing matches is not taxable and part of this cost is recovered through gate collections. The appellants could not have taken cenvat credit on the input services availed by them for organizing matches. It is proper to call for a pre-deposit of Rs.18 lakhs on this count. Issues:Service tax liability on business support services provided to BCCI-IPL, service tax on payments to foreign players, service tax on commission paid to agency, reversal of Cenvat credit for exempted services.Analysis:1. The appellants, franchisees of BCCI-IPL T-20 Cricket Tournament, were held liable for service tax on various activities and payments as per the agreement between the parties. The confirmed liabilities included service tax on business support services, payments to foreign players, commission paid to an agency, and reversal of Cenvat credit for exempted services.2. The Counsel argued that the demand for service tax on business support services was not maintainable as the activity was based on a profit-sharing agreement with no services provided to BCCI-IPL directly. The payments were considered as the appellants' share of receipts received centrally by BCCI.3. Regarding service tax on payments to foreign players, the Counsel contended that the payments were for playing cricket and not for services to the appellants. The adjudication order's argument that the entire payment should be liable to service tax was challenged based on the agreement clause indicating only 10% of the player fee for business promotion.4. The issue of commission paid to the agency in Sri Lanka for entering into contracts with foreign players was briefly discussed due to the small amount involved, with no detailed argument presented.5. The Counsel disputed the service tax liability on gate receipts received from selling tickets for matches, arguing that it did not qualify as payment for services. Therefore, taking Cenvat credit on input services for organizing matches did not necessitate the reversal of credit under Rule 6(3)(i) of the Cenvat Credit Rules.6. The Revenue contended that the activities organized by the appellants were for business promotion, making them liable for service tax. The services provided, such as recruiting players and staging matches, were seen as promoting the business of BCCI, irrespective of the appellants' current profit status.7. The Tribunal opined that not every payment made by BCCI-IPL to the appellants was for services rendered, as the parties were engaged in a joint business venture. Referring to a relevant circular, it was clarified that such revenue-sharing arrangements did not involve one party providing services to the other.8. The Tribunal found that a pre-deposit was necessary for certain items, such as payments to foreign players and commission paid to the agency, but waived the balance of duties for admission of appeal with a stay on collection during the appeal's pendency.In conclusion, the Tribunal required a pre-deposit for specific items, considering the arguments presented by both sides and the applicable legal provisions.