2008 (8) TMI 25 - AT - Service Tax

Appellate Tribunal rules Appellants not liable for service tax on sponsor amounts for golf tournaments

M/s Tiger Sports Marketing Pvt. Ltd. Versus CST, New Delhi

The Appellate Tribunal CESTAT, New Delhi held that the Appellants were not liable to pay service tax on the amount received from sponsors for organizing ... Appellants have taken service tax registration as ‘Event Manager’ and paid tax on the gross amount received from Sponsors minus prize money, Pro-Am prize money, entry fees - Revenue demand tax on the gross amount received including entry fees, prize money & Pro-Am prize money - service provided by the Appellants to the companies sponsoring the tournament, is similar to ‘Sponsorship service’ which became taxable only w.e.f. 18/04/06 – demand under Event Management Service is not justified Issues:1. Whether the Appellants are liable to pay service tax on the gross amount received from sponsors for organizing golf tournaments.2. Whether the Appellants can be considered as Event Managers under Section 65(41) of the Finance Act, 1994.3. Whether the service provided by the Appellants to sponsors amounts to 'Sponsorship Service.'4. Whether the Appellants provided event management services to themselves or to the sponsors.5. Whether the service tax demand raised by the Revenue is justified.Analysis:Issue 1:The Appellants had an agreement with the Professional Golfer's Association of India (PGAI) granting them commercial rights in golf tournaments. The Revenue contended that service tax was chargeable on the gross amount received from sponsors, including entry fees, prize money, and Pro-Am prize money. The Appellants argued that the amount received from sponsors cannot be subjected to service tax as it was not for rendering event management services.Issue 2:The Appellants argued that they were not Event Managers under Section 65(41) of the Finance Act, 1994, as they only had marketing rights in the events of professional golfers. They emphasized that they were required to pay consideration to PGAI for the commercial rights granted, and hence, not liable to pay service tax.Issue 3:The Appellants contended that the service provided to sponsors was akin to 'Sponsorship Service,' which only became taxable from a later date. They highlighted that the commercial rights acquired by them in the golf tournaments could not be considered as payment in kind for organizing the tournaments during the disputed period.Issue 4:The Tribunal examined the agreement between the Appellants and PGAI, concluding that the Appellants had obtained commercial rights in tournaments in exchange for consideration to be paid to PGAI. It was established that the Appellants provided event management services to themselves by organizing the golf tournaments, making them not liable to pay service tax on the amount received from sponsoring companies.Issue 5:After careful consideration, the Tribunal held that no event management service was provided by the Appellants to PGAI or the sponsoring companies. Therefore, the service tax demand raised by the Revenue was deemed unjustified. The impugned order was set aside, and the appeal was allowed.This detailed analysis of the judgment from the Appellate Tribunal CESTAT, New Delhi highlights the key issues, arguments presented by both sides, and the Tribunal's findings on each issue, providing a comprehensive understanding of the legal reasoning and decision-making process involved in the case.