2014 (12) TMI 419 - AT - Service Tax

Tribunal waives tax with interest & penalty for sponsorship service. Precedents support applicant's case.

M/s. Vodafone Cellular Ltd. Versus Commissioner of Central Excise, Customs & Service Tax, Chennai

The Tribunal granted a waiver of pre-deposit of tax amounting to Rs. 59,12,035/- along with interest and penalty for the period 2006-07 to 2009-10 under ... Waiver of pre-deposit of tax - sponsorship Service - Held that:- demand of service tax of ₹ 15,29,400/- on the amount, that the applicant created provision ‘Sponsorship expenses’ every year in their books of account. The learned Counsel for the applicant drew the attention of the Bench to the relevant portion of the Adjudication Order on this issue. On a perusal of the table at Para 9.01 of the order, we find that the applicant made a provisional arrangement for sponsorship in the books of accounts for every year, which was reversed in the subsequent financial year. It is seen from the table that reversed the amounts for the year 2006-07 to 2008-09 as mentioned provisions were reversed in the subsequent financial year. The dispute relates to provisions made in 2009-10. The applicant had contended before the Adjudicating authority that the said amount was reversed in the subsequent financial year 2010-11. Prima facie, we find that the applicant reversed the provisional amount in the subsequent financial year. - applicant has made out a strong prima facie case for waiver of pre-deposit of entire amount of tax along with interest and penalty till disposal of the appeal. Accordingly, pre-deposit of the entire amount of tax along with interest and penalty is waived and recovery thereof stayed till the disposal of the appeal - Stay granted. Issues:1. Waiver of pre-deposit of tax for the period 2006-07 to 2009-10 under 'sponsorship service'.2. Tax demand related to sponsorship to Cricket Tournament.3. Interpretation of 'Sports Sponsorship' in relation to service tax.4. Provision made for 'Sponsorship expenses' in the books of account.Analysis:1. The applicant sought waiver of pre-deposit of tax amounting to Rs. 59,12,035/- along with interest and penalty for the period 2006-07 to 2009-10 under the category of 'sponsorship service'.2. The tax demand of Rs. 43,79,704/- was raised on the amount paid towards sponsorship to Cricket Tournament, specifically the ICC World Cup and IPL. The applicant contended that the sponsorship related to sports events was excluded from the definition of 'sponsorship' during the relevant period.3. The Tribunal examined the definition of 'Taxable Service' under Section 65 (105) (zzzn) of the Finance Act, 1994 prior to 01.07.2010, which excluded services in relation to sponsorship of sports events. Despite the Revenue's argument that the payment made to BCCI did not fall under 'Sports Sponsorship', the Tribunal found precedents where unconditional stay was granted on similar issues, indicating a strong prima facie case for waiver of pre-deposit of tax.4. Regarding the provision made for 'Sponsorship expenses' in the books of account, the applicant had created a provisional arrangement for sponsorship expenses each year, which was reversed in the subsequent financial year. The Tribunal noted that the applicant had reversed the amounts for the years 2006-07 to 2008-09 in the subsequent financial year, with a dispute arising for the provisions made in 2009-10. The Tribunal found that the applicant had prima facie reversed the provisional amount in the subsequent financial year.5. Considering the arguments presented and the precedents cited, the Tribunal concluded that the applicant had established a strong prima facie case for waiver of pre-deposit of the entire tax amount along with interest and penalty until the appeal's disposal. Therefore, the pre-deposit of the entire tax amount along with interest and penalty was waived, and recovery stayed pending the appeal's disposal. The stay application was allowed.