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

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 the category of 'sponsorship service'. Despite the Revenue's argument that the payment made to BCCI did not fall under 'Sports Sponsorship', the Tribunal found precedents supporting the applicant's case, leading to the waiver of the entire tax amount along with interest and penalty until the appeal's disposal. Recovery was stayed pending the appeal's outcome, and the stay application was allowed.

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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.

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