In terms of the provisions of the Central Goods and Services Tax Act, 2017, and the Notification No. 13/2017 – Central Tax (Rate) dated 28th June 2017, services supplied by an individual as a performing artist or sportsperson to a body corporate fall under the ambit of reverse charge mechanism (RCM), subject to specific conditions.
As per Entry No. 6 of the aforementioned notification (as amended), where services are provided by an individual sportsperson (including a cricketer) by way of participation in a sporting event organized by a recognized body or franchise, and such services are received by a body corporate (e.g., IPL franchise), the recipient is liable to discharge GST under RCM. The consideration paid to the cricketer, including the auction amount (retainer or match fees), constitutes taxable supply of services under the heading “services by an individual as a sportsperson.”
Further, the sportsperson is considered to be providing services in their individual capacity and not as a body corporate or through a business entity. The IPL franchise, being a body corporate registered under the Companies Act, 2013, is treated as the recipient of such services and is therefore liable to pay GST under Section 9(3) of the CGST Act, 2017, read with the aforementioned notification.
Thus, it is legally tenable that the IPL franchise shall be liable to pay GST under reverse charge on the auction or bid amount paid to cricketers, provided the cricketer is not himself registered under a corporate entity or supplying through a third-party business. The nature of the auction and the venue of its conduct have no bearing on the applicability of tax; the liability is determined based on the nature of the service, the status of the supplier, and the recipient under law.
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