Cricketer's IPL income not taxable as business support services under Finance Act, 1994

The Tribunal allowed the appeal, ruling that the cricketer contracted to play for Mumbai Indians in the IPL was not taxable under 'support services of business or commerce' as per the Finance Act, 1994. The decision was based on precedents indicating that the cricketer, akin to an employee under the franchisee's control, did not provide such services. The Tribunal set aside the tax demand and penalty, concluding that the cricketer was not rendering business support services, ultimately allowing the appeal.

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Issues:
Taxability of players in the Indian Premier League (IPL) under section 73 of Finance Act, 1994 for providing 'support services of business or commerce' as per section 65(104c) and section 65(105)(zzzq).

Analysis:
The case involved a cricketer contracted to play for Mumbai Indians in the IPL, facing tax recovery proceedings under the Finance Act, 1994. The original authority confirmed a demand of &8377; 7,94,048 for two periods, with interest and penalty imposed. The first appellate authority upheld the demand but set aside the penalty invoking section 80. The appeal challenged the order-in-appeal of the Commissioner of Central Excise (Appeals), Pune-III.

The appellant's counsel argued citing precedents that players in the IPL were not taxable under 'support services of business or commerce.' The Authorized Representative contended that the appellant promoted the franchisee's business interest, lacked bifurcation of consideration, and couldn't exclude himself from the service category due to subsequent changes in the law.

The decision referred to the judgment of the Calcutta High Court in Sourav Ganguly v. Union of India, challenging a circular on fees paid to players. It highlighted that brand promotion was not taxable pre-July 2010, and the cricketer was under the franchisee's control, akin to an employee, not an independent worker providing business support services. Thus, the cricketer was not rendering such services, leading to the appeal's allowance based on Tribunal decisions.

In conclusion, the Tribunal set aside the impugned order, following precedents that players like the appellant did not provide 'support services of business or commerce,' ultimately allowing the appeal.

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