TaxTMI 
TaxTMI 
2023 (6) TMI 1081
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.... Section 78 of the Finance Act, 1994. 2.1 The appellant are a telecommunication network provider rendering telecommunication services in Tamil Nadu (except Chennai), Maharashtra (except Mumbai) and State of Kerala. The appellant is a subsidiary of M/s. Vodafone India Limited, which carries on pan India operations through other group concerns such as M/s. Vodafone Digilink Limited, M/s. Vodafone Essar Limited, etc., for providing network services within specially demarcated telecommunication circles. 2.2 On a perusal of the books of accounts of the appellant, the Revenue noticed that the appellant had incurred an expenditure of Rs.5,19,49,020/- on sponsorship services during the period from 01.05.2006 to 31.03.2010. Scrutiny of the S.T.-3 returns filed by the appellant for the relevant period indicated that appropriate Service Tax was not paid by the appellant in respect of the sponsorship service received by them, leading to the issuance of a Show Cause Notice vide SCN Sl.No.:07/2011-Commr. dated 22.09.2011, which came to be adjudicated demanding Service Tax and imposing penalties, as indicated at paragraph 1 of this order. 3.1 The Ld. adjudicating authority has held that the ap....
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....3 He has further held that: - (i) Twenty20 Cricket League which has been established by the BCCI-IPL, is not a cricketing event and as such, the services received by the appellant would be covered under the ambit of taxable service under the category of "sponsorship service". (ii) No evidence has been submitted by the appellant for having sponsored the ICC Cricket World Cup and as such, taxability of services received could not be examined. (iii) The principal company had agreed to sponsor and also made the payment and it is they who received the service and thus the liability to pay as per Rule 2(1)(d)(viii) of the Service Tax Rules, 1994 is not on the group company though they are the beneficiaries of the brand. The principal company and the appellant are all separate legal entities and so, are required to maintain separate books of accounts under the law and also that the principal company would have indicated the above expenses in their books of account and would have also paid the appropriate Service Tax thereupon; in the fitness of things, it was for VECL (appellant) to take CENVAT Credit in case they are the beneficiaries. 3.4 M/s. Vodafone India Limited, Mumbai, M/s.....
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....ts events were specifically excluded from the purview of sponsorship services; the impugned order has confirmed the demand on the ground that the appellant has only sponsored a team in the IPL as opposed to sponsoring a tournament. 4.3.2 He has relied on the decision in the case of M/s. Vodafone Cellular Ltd. v. Commissioner of Central Excise, Pune-III [2017 (51) S.T.R. 26 (Tri. - Mum.)] wherein the Tribunal had basing on the decision in the case of M/s. Hero Motorcorp Limited v. Commissioner of Service Tax, Delhi [2013 (32) S.T.R. 371 (Tri. - Del.)] which was affirmed by the Hon'ble Supreme Court as reported in 2016 (44) S.T.R. J59 (S.C.), held that no Service Tax demand on sponsorship of sports events could be fastened on the appellant. 4.3.3 The appellant further relied on the following decisions which have held that prior to 01.07.2010, sponsorship of teams in the IPL will be excluded from the Service Tax Net: - (i) DLF Ltd. v. Commissioner of Service Tax, Delhi [2012 (27) S.T.R. 512 (Tri. - Del.)] (ii) Jaiprakash Associates Ltd. v. Commissioner of Service Tax, Delhi [(2014) 41 taxmann.com 256 (New Delhi - CESTAT)] (iii) KPH Dream Cricket Pvt. Ltd. v. Commissioner of C.....
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....debit notes from M/s. Vodafone India Limited, Mumbai and M/s. Vodafone Cellular Limited, Pune and it was concluded that the provision of amounts was effected in connection with their associated enterprises. 4.4.2 The appellant submitted that the transaction is not the one between associated enterprises because the provision is not in the name of any person and in any case, it is not in the name of any associated enterprise; that even assuming without accepting that the transaction was between the associated enterprises, such amounts would not be taxable under reverse charge mechanism. It is also put forth that if the transaction was between associated enterprises, then the person liable to pay tax would be the service provider and not the appellant. 4.4.3 It is their contention that the provision for the sponsorship expenses were made only in the Sponsorship Ledger and not in the account of the associated enterprises and as such, there is no merit in the finding in the impugned order that the provisioned amount is subject to levy of Service Tax according to Explanation (c) to Section 67 of the Act. Further, Explanation (c) to Section 67 of the Act uses the term "payment" which wo....
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....nd penalties imposed. 6. We have considered the submissions made by both sides and have gone through the records as available in this appeal. 7.1 The main issue that is required to be decided in this appeal is: whether the amount paid by the appellant towards sponsorship of cricket tournaments namely, ICC Cricket World Cup and Indian Premier League (IPL) can be subjected to levy of Service Tax or not. 7.2 The other issues regarding invoking of extended period of limitation and whether the appellant would be liable for imposition of penalty under Sections 77 and 78 of the Finance Act, 1994 can be considered once the main issue is examined as to the taxability or otherwise for the sponsorship of cricket tournaments. 8.1 During the impugned period, "sponsorship" was defined under Section 65(99a) of the Finance Act, 1994 to mean: - "(99a) "sponsorship" includes naming an event after the sponsor, displaying the sponsor's company logo or trading name, giving the sponsor exclusive or priority booking rights, sponsoring prizes or trophies for competition; but does not include any financial or other support in the form of donations or gifts, given by the donors subject to the conditio....
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.... team in the IPL T-20 cricket tournament. The enumerated bouquet of benefits accruing to the appellant under the agreement such as printing; player's appearances; motorcycle display; merchandise; motorcycle for promotion; and participative rights in prize presentation; championship tournaments; celebrity events; website/blog entitlement; and marketing plans by GMR, clearly establish that the sponsorship is of the GMR owned Delhi Daredevils team in relation to its participation in the T-20 tournament. 11. The sponsorship agreement is in our considered view a clear commercial transaction, the underlying purpose being the assumption that since BCCI-IPL-T-20 matches generate huge public viewership, either directly at the venues or through audio visual and print media as well, the appellant's association with the T-20 sports event through Delhi Daredevils team would showcase the appellant's presence in its core business as a manufacturer of two wheeler motorbikes. It is neither the case of the adjudicating authority as revealed in the adjudication order nor the case of Revenue before this Tribunal that the sponsorship agreement was entered into with GMR either to sponsor GMR or to spo....
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....lls within the exclusionary clause i.e. the clause which excludes sponsorship services in relation to sports events, the appellant is clearly immune to the charge of service tax. It is a settled principle of statutory construction that the phrase "in relation to" is indicative of expansive intention. As pointed out in Doypack Systems (Pvt) Ltd. v. Union of India reported in 1988 (36) E.L.T. 201 (S.C.). The expression "in relation to" is a very broad expression. These are words of comprehensiveness which might both have a direct significance as well as indirect significance depending on the context. The Supreme Court explained that the said expression connotes "concerning that" and "pertaining to", are expressions of expansion and not contraction. 14. Shri Amresh Jain, ld. DR contends on behalf of Revenue that sponsorship was only of a team and not of sport events and that the amounts paid by the appellant to GMR fall outside the exclusionary clause of the provision. This contention is stated to be rejected. Under Article 265 of the Constitution no tax could be levied without legislative authority. A legislative provision is thus the sine qua non for a legitimate levy of tax. The ....