2026 (3) TMI 351 - AT - Service Tax

Business Support Service: composite player fees for matches and promotions are not taxable; CBEC instruction cannot create levy.

Remuneration paid to a professional player by a league franchisee for match participation and promotional activities does not qualify as a 'business ... Contractual agreement for promoting/marketing logos/brands/marks of the franchisee and sponsors and has received remuneration from the same - taxable under “business support services” as per Section 65 (104c) of the Finance Act, 1994 - Demand along with interest and imposing equal penalty - Circular cannot create tax liability beyond statute. Remuneration received by IPL players - taxable as business support services - HELD THAT: - The Tribunal applied precedents, notably the Calcutta High Court and Tribunal decisions in the Sourav Ganguly [2016 (7) TMI 237 - CALCUTTA HIGH COURT] and Shriya Saran [2014 (7) TMI 78 - CESTAT NEW DELHI] line of cases, holding that an IPL player engaged under a franchise contract functions as a purchased team member subject to the franchise's control and is not rendering an independent business support service. The tribunal accepted the reasoning that fees for playing matches fall outside taxable service and that a departmental circular which purports to tax a composite payment (where segregation of playing and promotional components is not possible) cannot expand statutory liability. The Board's instruction was held to be administrative guidance that cannot override or create tax liability absent statutory provision, and therefore could not be applied to impose service tax on the appellant's remuneration. Demand for service tax on the appellant's remuneration as business support services is unsustainable; the departmental instruction cannot create such liability. Final Conclusion: The appeal is allowed; the demand for service tax on the appellant's remuneration for the periods 2008-09 and 2009-10 founded on classification as business support services and on the Board's instruction is not sustainable. Issues: Whether remuneration received by an IPL player from franchisees for playing matches and for promotional activities can be taxed as 'business support service' under Section 65(104c) of the Finance Act, 1994, and whether the CBEC instruction dated 26 July, 2010 can be relied upon to tax composite fees if segregation is not possible.Analysis: The Tribunal examined precedent including the Calcutta High Court decision in Sourav Ganguly and Tribunal authorities holding that IPL players engaged under franchise contracts are not rendering business support services as independent contractors for the franchisees but perform as professional players subject to franchise control. The Tribunal considered the legal scope of Section 65(104c) of the Finance Act, 1994 and the limits of administrative instructions, noting that a board instruction or circular cannot expand statutory taxing provisions or create a tax liability where the statute does not provide it. The reasoning applied prior decisions which held that fees for playing matches fall outside taxable services and that the CBEC instruction of 26 July, 2010 cannot lawfully subject a composite fee to service tax when the statute does not contemplate such a levy.Conclusion: The Tribunal concluded that the remuneration received by the player from the IPL franchisee could not be taxed under 'business support service' and that the CBEC instruction dated 26 July, 2010 cannot be used to create a tax liability on composite fees. The appeal is therefore allowed in favour of the assessee.