Tribunal Grants Waiver on Pre-Deposit for Sponsorship Services

The Tribunal granted a complete waiver of pre-deposit for sponsorship services related to the Mumbai Indian IPL team, M/s. Otago Cricket Association, and the IIFA awards, as they fell outside the scope of taxable services. Additionally, the Tribunal ruled in favor of the applicant regarding the membership fee paid to the GSM Association and the Cenvat credit for inputs and input services for office construction. However, the applicant was directed to pre-deposit a specific amount for Cenvat Credit on towers and shelters due to the extended period of limitation invoked. Compliance with the pre-deposit requirement would stay the remaining service tax demand, interest, and penalty during the appeal process.

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Issues Involved:

1. Sponsorship of Mumbai IPL Team and M/s. Otago Cricket Association.
2. Sponsorship of IIFA awards.
3. Membership of GSM Association.
4. Cenvat Credit on towers, shelters, and related services.
5. Cenvat Credit on inputs and input services for construction of office.
6. Cenvat Credit on ineligible capital goods like chairs, furniture, etc.
7. Cenvat Credit on the basis of invoices in the name of unregistered premises.

Issue-wise Detailed Analysis:

Issue No. 1: Sponsorship of Mumbai IPL Team and M/s. Otago Cricket Association

The applicant argued that the sponsorship services for the Mumbai Indian IPL team and M/s. Otago Cricket Association fall under the exclusion clause of taxable sponsorship services as defined in section 65 (105) (zzzn) of the Finance Act, 1994. The Tribunal referenced the Hero Motocorp Ltd. case, which determined that sponsorship of a team in relation to its participation in sports events falls within the exclusionary clause and is not taxable. Consequently, the Tribunal granted a complete waiver of pre-deposit for the amounts related to these sponsorships.

Issue No. 2: Sponsorship of IIFA Awards

The applicant contended that the sponsorship services for the IIFA awards were received and consumed outside India, and thus, no service tax liability arises. The adjudicating authority had confirmed the demand based on Rule 3 (iii) of the Taxation of Services Rules, 2006. However, the Tribunal, referencing the Cox & King India Ltd. case, concluded that since the services were consumed outside India, they are not subject to service tax. The Tribunal granted a complete waiver of pre-deposit for this amount.

Issue No. 3: Membership of GSM Association

The applicant argued that the membership fee paid to the GSM Association should not be subject to service tax under club or association services, which have been held ultra-vires by the Gujarat High Court in the Sports Club of Gujarat Ltd. case. The Tribunal agreed, granting a complete waiver of pre-deposit for this amount.

Issue No. 4: Cenvat Credit on Towers, Shelters, and Related Services

The Tribunal found that the applicant did not have a prima facie case for a waiver of pre-deposit regarding Cenvat Credit on towers and shelters, referencing the larger bench decision in Tower Vision India Pvt. Ltd. However, given the extended period of limitation invoked, the Tribunal directed the applicant to pre-deposit Rs. 65,632, which pertained to the period within the limitation.

Issue No. 5: Cenvat Credit on Inputs and Input Services for Construction of Office

The applicant contended that credit should be allowed for construction services used for setting up office premises. The Tribunal referenced the Bellsonica Auto Components India Pvt. Ltd. case, where the Punjab & Haryana High Court allowed such credit. Consequently, the Tribunal granted a complete waiver of pre-deposit for this amount.

Issue No. 6: Cenvat Credit on Ineligible Capital Goods Like Chairs, Furniture, etc.

The applicant had already reversed the credit of Rs. 13,20,327 on these items. The Tribunal found this reversal sufficient and did not require further pre-deposit.

Issue No. 7: Cenvat Credit on the Basis of Invoices in the Name of Unregistered Premises

The applicant argued that there is no requirement for inputs to be received at the registered premises for availing Cenvat Credit. The Tribunal referenced several cases, including Allspheres Entertainment Pvt. Ltd. and Kenwell Biopharma Pvt. Ltd., which supported the applicant's position. Consequently, the Tribunal granted a complete waiver of pre-deposit for this amount.

Conclusion:

The Tribunal directed the applicant to pre-deposit Rs. 65,632 within eight weeks and report compliance. Upon compliance, the balance amount of service tax demand, interest, and penalty would be stayed during the pendency of the appeal. The decision was pronounced in the open court on 12/05/2017.

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