TaxTMI 
TaxTMI 
2023 (8) TMI 1395
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....pport Service, etc., the Survey, Intelligence and Research (SIR) branch of Service Tax Commissionerate, Chennai conducted investigations. It was noted as under: 2.2 The Board of Cricket Control of India (BCCI), which is the Apex governing body for cricket in India, has its headquarters at Mumbai. BCCI is registered as a society on 25.09.2006 under the Tamil Nadu Societies Registration Act, 1875. During 2007, BCCI with an idea to pursue its commercial activities proposed a separate unit known as Indian Premier League (IPL) for conduct of "Twenty 20 Cricket Competition". The IPL was proposed to be Franchise model wherein corporates and sponsors would be allowed to buy and run teams for conduct of the IPL matches. Based on bidding, BCCI-IPL during the last week of January 2008 finalised 8 franchisees, out of which the appellant was one franchisee. The appellant selected its franchisee name- "Chennai Super Kings". 2.3 After finalization of franchisees, BCCI collected list of agreed contract players to play for each franchisee, which included players of Indian origin and foreign origin. BCCI also fixed base price for the players under the process of auction conducted on 07.02.2009....
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....-IPL (d) Franchisee Licensing Income 2.8 The appellant is liable to pay BCCI-IPL the franchisee consideration after adjustment of the league deposit and performance deposit and are also eligible to earn various incomes including receipt of their share of Central Licence Income and Central Rights Income from BCCI-IPL. Appellant is also liable to pay to BCCI-IPL any income earned from Franchisee Licensing. 2.9 These details and documents revealed that several taxable services were rendered / received by appellant. It appeared to the Department that the entire transactions relating to IPL including conduct of matches is done with a view to promote the business/commercial interest of the franchisees (including the appellant) and therefore the share of Central income and other sums earned by appellant from BCCI-IPL is consideration for providing Business Support Services (BSS) to BCCI-IPL. As the appellant supports the commercial activities of IPL, the amount received by appellant from BCCI-IPL is taxable under the category of BSS which is defined in Section 64 (104c) of the Finance Act, 1994. The appellant had not discharged the service tax on such receipts from BCCI-IPL....
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....m the contract that 14 players were of foreign origin and 20 players of India nationality. The payment made by the appellant to the players of foreign origin was taxable under reverse charge mechanism as per Section 66A of Finance Act, 1944. The players having rendered to the appellant the various activities of promotional activities, the appellant is liable to pay Service Tax under RCM as the amount paid to the foreign players; the appellant being the receipt of service. It appeared to Department that the appellant is liable to pay Service Tax for the payment made to foreign players as these individuals were providing BSS to appellant and being import of services as under Rule 2(1)(d)(iv) of Service Tax Rules, 1994, the appellant has to pay Service Tax under reverse charge mechanism (under 66A) for the services received from these players. The appellant had not discharged the appropriate Service Tax for the import of services. 2.12 Fourthly, it was further noted that the appellant had entered into agreement with Aircel Ltd., wherein the appellant granted the sponsorship right and other rights to Aircel to sponsor the Chennai Super Kings team in accordance with the terms of the ....
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....ms under BCCI-IPL which conducts Twenty-20 Cricket Tournament every year. 4. In the year 2008, the BCCI proposed to organize a Twenty-20 Cricket Competition for popularising cricket in India and to garner additional funds for the Board to further its objectives. A sub-committee called BCCI-IPL was constituted to organize the tournament known as "Indian Premiere League" (IPL). The tournament was being organized on the franchisee model where anyone was allowed to bid for the right to organize and run teams as franchisees of BCCI-IPL on payment of the appropriate franchise fees and subject to the terms of the Contract specified by the BCCI-IPL. The appellant also put in their bid for the franchise of the BCCI-IPL for the Chennai Region and were successful in the bid. Accordingly the appellant executed a Franchise Agreement with BCCI-IPL on 10.04.2008. The franchise agreement authorized the appellant to organize a cricket team to participate in the BCCI-IPL "Twenty-20 Tournament.". The franchise Agreement vested certain rights and responsibilities on both the parties, viz., the appellant who is franchisee and BCCIIPL who is the franchiser. The agreement provided for the Franchiser t....
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....are of central income received from BCCI-IPL, it is submitted by the Ld. counsel that the original authority has confirmed the demand of Service Tax on the amount received by the appellant from BCCI-IPL on a revenue sharing basis. It is alleged by the Department that the said amount is received by the appellant as a consideration for providing services to BCCI-IPL involving furtherance of business / commerce. It is submitted by the Ld. counsel that the agreement entered between BCCI-IPL and the appellant would show that there is no obligation or quid pro quo on the part of the appellant in lieu of this payment. Clause 8 of this agreement refers to the allocation of the central right income between the franchisees and BCCI-IPL. It is the same for all franchisees. From the terms of this clause itself it is clear that it is only a revenue sharing mechanism. There are no conditions specifically attached with regard to the distribution of the income and there are no conditions also qualifying this income. In other words the BCCI-IPL is unconditionally sharing the income with the franchisees for the development of the game and for the success of the tournament. There is no mention in the....
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....another for receiving consideration and therefore cannot be taxed. In the case of Tamil Nadu Cricket Association vide F.O. No. 40058-40060/2023 dated 20.02.2023 (Chennai Tri.) it was held that the demand of Service Tax under business support services in regard to amounts received from BCCI-IPL is not sustainable. The fact that BCCI-IPL is not a business organization has already been affirmed by the Hon'ble Supreme Court in the decision of BCCI Vs. CST [2017 (7) STR 384 (SC)]. The Mumbai Income Tax Tribunal in the case of Board of Control for Cricket in India Vs. Principal Commissioner of Income-tax [2020 (132) Taxmann.com 132] has held that where all funds including additional funds generated form Indian Premier League tournament (IPL), were employed by assessee-trust (BCCI) for promoting cricket, merely because operational model of IPL was more entertaining, more economically viable, provided greater economic opportunities to all those associated with that tournament and resulted in more sponsorship and mobilized greater financial resources it could not be said to be of commercial nature. 10. On the second issue in regard to the demand of Service Tax under "sale of space a....
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....not liable to pay Service Tax on the sponsorship fee for the reason that prior to 01.07.2010, the sponsorship services for sports were not leviable to Service Tax. It is submitted that notices have been issued to the other franchisees of BCCI-IPL demanding Service Tax under sponsorship services with respect to the agreements entered in to for granting sponsorship rights. The Tribunal in such cases has held that the definition of sponsorship services does not include services in relation to sponsorship of sports events and IPL being a sport event is not covered under the definition of sponsorship services. The appeals filed by the Department against the decisions of the Tribunal have been dismissed by the Hon'ble Supreme Court. The following Tribunal decisions were relied by the Ld. counsel for the appellant: • KPH Dream Cricket Pvt. Ltd. Vs. CCE & ST (supra) • Hero Motocop Ltd. Vs. CST 2013-TIOL-873- CESTAT-DEL • Hero Honda Motors Ltd., DLF Ltd. Vs. CST, Delhi 2013-TIOL-871-CESTAT-DEL 13. The Ld. counsel submitted that the Department cannot classify the consideration under sponsorship agreement under sale of space and time for advertisement....
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....f the IPL Cricket tournament. Therefore they did not have the status of independent entities and they cannot deal with the appellant on a principal to principal basis. It is a fundamental requirement that for rendering business support service, the service recipient should be an independent business entity and has to be on principal to principal relationship. From the terms of the contract with the players, it is clear that they did not meet the ingredients required to fit into the category of business support services. Even if there may be any promotional activities they were ancillary to the main activity of playing cricket. This issue is also covered by the decision of the Tribunal in the case of KPH Dream Pvt. Ltd. (supra), Yusufkhan M Pathan and Irfankhan Pathan F.O. No. 10086 & 10087/2023 in ST/127/2012 (Ahmd. Tri.). 16. The Ld. counsel argued on the ground of limitation also. It is submitted that the adjudicating authority failed to appreciate that the demand relating to the year 2008- 2009 is time barred. The Show Cause Notice is issued on 14.10.2010 and the demand is for the period upto 31.03.2009. In normal course, the demand ought to have issued before 25.04.2010. Tho....
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....sue was considered by the Tribunal in the case of KPH Dream Cricket Pvt. Ltd. (supra) as well as in the case of M/s. Jaipur IPL Cricket Pvt. Ltd. (supra). The relevant paragraph of the decision in the case of KPH is reproduced as under:- "6. We have gone through the agreement and find that the agreement is in nature of revenue sharing and the said issue has been examined by this Tribunal in the case of Mormugao Port Trust (supra) wherein this Tribunal has observed as under :- "17. The question that arises for consideration is whether the activity undertaken by a co-venture (partner) for the furtherance of the joint venture (partnership) can be said to be a service rendered by such co-venturer (partner) to the Joint Venture (Partnership). In our view, the answer to this question has to be in the negative inasmuch as whatever the partner does for the furtherance of the business of the partnership, he does so only for advancing his own interest as he has a stake in the success of the venture. There is neither an intention to render a service to the other partners nor is there any consideration fixed as a quid pro quo for any particular service of a partner. All the r....
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....r individuals who make the contribution in return for the benefit so derived. 13.... Neither can monetary contribution of the individuals that is not attributable to an identifiable activity be deemed to be a consideration that is liable to be taxed merely because a "club or association" is the recipient of that contribution. 14.... To the extent that any of these collections are directly attributable to an identified activity, such fees or charges will conform to the charging section for taxability and, to the extent that they are not so attributable, provision of a taxable service cannot be imagined or presumed. Recovery of service tax should hang on that very nail. Each category of fee or charge, therefore, needs to be examined severally to determine whether the payments are indeed recompense for a service before ascertaining whether that identified service is taxable." 19. We are accordingly of the view that activities undertaken by a partner/co-venturer for the mutual benefit of the partnership/joint venture cannot be regarded as a service rendered by one person to another for consideration and therefore cannot be taxed." "23. We are accordi....
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....rom the above decision, it can be seen that the income received by the appellant from Central rights is nothing but revenue sharing and not consideration for services provided to BCCI-IPL. Following the decision in the case of KPH Dream Cricket Pvt. Ltd. (supra) and M/s. Jaipur IPL Cricket Pvt. Ltd. (supra), we are of the view that the demand under this head cannot sustain and requires to be set aside, which we hereby do. 20. The second issue is the demand of Service Tax under the category of sale space or time for advertisement. The appellant has entered into sponsorship agreements with various corporates. There is no liability to pay Service Tax on sponsorship of sports events till the year 2010. The period of dispute in the present appeals is prior to 01.07.2010. The very same issue was considered by the Tribunal in the case of Hero Motocorp Ltd. Vs. CST 2013-TIOL-873-CESTAT-DEL and in the case of Hero Honda Motors Ltd., DLF Ltd. vs. CST, Delhi 2013-TIOL-871-CESTAT-DEL. The relevant paragraphs read as under:- "14. The adjudicating authority (though a different incumbent of the authority) passed an order which is the subject matter of Service Tax Appeal No. 1418 ....
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....o sports events, but is sponsorship of BCCI / IPL. 17. Both fundamental premises of the adjudication authority are misconceived and unsustainable. The impugned adjudication orders are therefore quashed. 18. These appeals are allowed but in the circumstances without costs." 21. The third issue is the demand raised alleging that the appellant has provided exempted services in the nature of sale of tickets. The Tribunal in the case of KPH Dream Cricket Pvt. Ltd. (supra) and M/s. Jaipur IPL Cricket Pvt. Ltd. (supra) had occasion to consider the very same issue and held that sale of tickets cannot be considered as an exempted service. The demand raised on this ground was set aside. Following the same, we are of the view that the demand cannot sustain and requires to be set aside which we hereby do. The relevant paragraph of the decision in the case of M/s. Jaipur IPL Cricket Pvt. Ltd., has reproduced as under:- "5.5. The fifth issue is relating to the reversal of common credit incorrectly availed in relation to input services utilised for taxable and exempt output services quantified as Rs. 2,18,58,230/-. The demand for reversal is in respect of appell....
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....y which is not a service as defined under Section 65B (44) of the Finance Act, 1994" w.e.f. 01.04.2016, for which reversal of cenvat credit is required. Hence, prior to this there was no legal requirement legally binding an assessee to reverse cenvat credit of inputs or inputs services taken on such activities which are not services under the scope of the said Finance Act, 1994. Considering the above legal position in respect of Cenvat Credit Rules, 2004 and that the ratio of the above decision squarely applies to the present case in hand, we are of the view that the confirmation of demand Rs. 2,18,58,230/- towards common Cenvat credit reversal is not sustainable." 22. The fourth issue is with regard to the demand raised alleging that the appellant is liable to pay Service Tax under reverse charge mechanism on the payments made to foreign players. The very same issue was considered by the Tribunal in the case of KPH Dream Cricket Pvt. Ltd. (supra). The facts and issue being identical, the decision is applicable in the present case also. Following the same, we are of the view that the demand cannot sustain and requires to be set aside, which we hereby do. Relevant paragraph ....