Cricket players wearing team logos during matches not liable for service tax under employment arrangement

CESTAT Chandigarh allowed the appeal regarding service tax liability on endorsement services and reality show participation. The Tribunal held that cricket players wearing logos and insignia during IPL matches are not promoting businesses but simply playing cricket per franchise conditions, following precedents in Sourav Ganguly and other cases. The arrangement between team owners and players constitutes employment, not business auxiliary services. Regarding the principal-agent relationship with the intermediary company, the Tribunal found no formal agreement was required, and since the appellant received no direct remuneration from the service recipient, they were not liable for service tax as their agent had already paid it on the same transaction.

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Issues: Liability of service tax on consideration received for playing in IPL, liability of service tax on endorsement services, liability of service tax on remuneration for a reality show.

Analysis:

Issue 1: Liability of service tax on consideration received for playing in IPL
The appellant contested the service tax liability on consideration received from various entities for rendering services during IPL matches. The appellant argued that previous Tribunal decisions, such as the case of Sourav Ganguly, have established that players displaying logos and labels are not promoting the businesses of the companies but are merely complying with franchise requirements. The Tribunal cited multiple cases where this principle was upheld, emphasizing that the players' activities during matches do not constitute taxable services. Therefore, the Tribunal ruled in favor of the appellant on this issue.

Issue 2: Liability of service tax on endorsement services
Regarding the alleged endorsement services provided to M/s Ranbaxy Laboratories, the appellant's counsel argued that the service of brand promotion as part of "Business Auxiliary Service" was introduced only from July 1, 2010. The appellant relied on legal precedents, including the case of Sourav Ganguly, to support the argument that services cannot be taxed under a different category before the specific service is notified. The Tribunal considered these arguments and found that the impugned order did not establish the liability of the appellant for service tax on endorsement services. The Tribunal ruled in favor of the appellant on this issue as well.

Issue 3: Liability of service tax on remuneration for a reality show
The appellant was also accused of not paying service tax on remuneration received for participating in a reality show. The appellant's counsel contended that M/s Rhiti, acting as the appellant's agent, had already paid the applicable service tax on the consideration received from M/s INX Media. The appellant argued that since the agent had discharged the service tax liability, the appellant should not be held liable again. The Tribunal examined the facts and concluded that the appellant, through the agent, had fulfilled the service tax obligation, and therefore, the appellant was not liable to pay service tax on the same transaction. Citing the case of Katrina R. Turcotte, the Tribunal ruled in favor of the appellant on this issue as well.

In conclusion, the Tribunal allowed the appeal, finding in favor of the appellant on all the issues raised. The impugned order was deemed unsustainable based on the arguments presented and the legal precedents cited. The appellant was granted consequential relief as per the law.

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