2024 (4) TMI 5 - AT - Service Tax

Appeals allowed on service tax demands for business support services and merchandise sales

CESTAT Chennai allowed appeals concerning service tax levy on business support services and merchandise sales. The tribunal held that payments to foreign ... Levy of service tax - Business Support Services - sale of merchandise - payments made to foreign players and staff - receipts from BCCI merchandise sale and import of service - reversal of CENVAT Credit - consideration paid to players could be considered as payment towards brand promotion services - HELD THAT:- Reliance placed in the case of M/S. INDIA CEMENTS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNNAI [2023 (8) TMI 1395 - CESTAT CHENNAI] of this very Bench in the appellant’s own case for different periods wherein the coordinate Bench has granted relief to the appellant by following the orders of other coordinate Benches and held that The very same issue was considered by the Tribunal in the case of KPH Dream Cricket Pvt. Ltd. [2019 (5) TMI 1171 - CESTAT CHANDIGARH] where it was held that on player’s fee, no service tax is payable. Sale of merchandise - it is the case of the appellant that there was no service but only sale, which is not amenable to service tax - HELD THAT:- It is found from the impugned order that there is no dispute that the demand pertains to the sale of merchandise and hence, the same can never be held to be ‘service’ by any stretch of imagination. Hence, the demand as far as this issue is concerned is set aside and the appeal is allowed to this extent. The impugned orders are set aside and the appeals allowed Issues involved:The judgment involves the following issues: (i) Whether the appellant rendered Business Support Services to BCCI - IPL.(ii) Whether the consideration paid to players could be considered as payment towards brand promotion services, requiring reversal in terms of Rule 6(3) of CENVAT Credit Rules, 2004.(iii) Demand of service tax on sale of merchandise.(iv) Demand of service tax on payments made to foreign players and staff.(v) Demand of service tax on receipts from BCCI merchandise sale and import of service.Summary of Judgment:Issue (i): The Tribunal considered whether the appellant provided Business Support Services to BCCI - IPL. The appellant contended that the income received from Central rights was revenue sharing, not payment for services to BCCI-IPL. The Tribunal, following previous decisions, ruled in favor of the appellant, setting aside the demand.Issue (ii): The question of whether the consideration paid to players constituted payment for brand promotion services was examined. The Tribunal found that the main activity of the appellant was playing cricket, with promotional activities being ancillary. Citing relevant case law, the Tribunal held that no service tax was payable on player's fee, and the demand was set aside.Issue (iii): Regarding the demand of service tax on the sale of merchandise, the appellant argued that it was a sale, not a service. The Tribunal agreed, stating that the sale of merchandise cannot be considered a service for taxation purposes. Consequently, the demand was set aside.Issue (iv): The demand of service tax on payments made to foreign players and staff under the reverse charge mechanism was considered. The Tribunal, following precedent, set aside the demand, ruling that no service tax was payable on these payments.Issue (v): Lastly, the demand of service tax on receipts from BCCI merchandise sale and import of service was addressed. The Tribunal found in favor of the appellant, setting aside the demand.In conclusion, the Tribunal set aside the impugned orders and allowed the appeals with consequential relief, if any, as per law. The judgment was pronounced in open court on 21.03.2024.