TMI Blog2023 (6) TMI 1081X X X X Extracts X X X X X X X X Extracts X X X X ..... f IPL and ICC cricket tournaments during the impugned period. In the case of M/S HERO MOTOCORP LTD VERSUS COMMISSIONER OF SERVICE TAX, DELHI [ 2013 (6) TMI 447 - CESTAT NEW DELHI] , the Tribunal, Delhi has held that the expression in relation to has a very wide connotation and the assessee s activity of sponsorship was in relation to sports events and so, not liable to Service Tax. The above decision has been affirmed by the Hon ble Supreme court vide its order in COMMISSIONER VERSUS HERO MOTOCORP LIMITED [ 2015 (7) TMI 1163 - SC ORDER] and subsequently, followed by the Tribunal, Mumbai in VODAFONE CELLULAR LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-III [ 2017 (2) TMI 1152 - CESTAT MUMBAI] wherein it has been held that, for the period under dispute, no Service Tax demand on sponsorship of sports events can be fastened on the appellant. Thus, the issue in dispute in this appeal is squarely covered by the decisions discussed, the impugned order ordered to be set aside - the provisions made in the books of account by the appellant as per the GAAP towards sharing the expenditure on account of receipt of sponsorship services cannot be subjected to tax as the ingredien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated demanding Service Tax and imposing penalties, as indicated at paragraph 1 of this order. 3.1 The Ld. adjudicating authority has held that the appellant received the services under the category of sponsorship services as defined under Section 65(99a) of the Finance Act, 1994, which has not been disputed by them. The points of dispute are regarding the provisions created as well as the taxability of certain portions of services received in view of the provisions of Section 65(105)(zzzn) of the Act, which read as under prior to 01.07.2010: - taxable service means any service provided or to be provided to any body corporate or firm, by any person receiving sponsorship, in relation to such sponsorship, in any manner, but does not include services in relation to sponsorship of sports events 3.2 The Ld. adjudicating authority, after examining a copy of the Official Partner Agreement entered into between the Board of Control for Cricket in India (BCCI) and M/s. Vodafone Essar Limited and seven other Vodafone group companies including the appellant herein, came to the conclusion that league is a composition of the teams which play the Twenty20 matches and as such, spon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon; 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. Vodafone Cellular Limited, Pune had paid the sponsorship amounts on behalf of VECL/appellant, as given in the table below, and for reimbursement of the same, debit notes have been raised: Year Debit Note received from Amount (in Rs.) Sponsored event 2007-08 VIL, Mumbai 2,53,36,500/- ICC Cricket World Cup 2007-08 VCL, Pune 1,00,98,000/- IPL Cricket Tournament Total 3,54,34,500/- 3.5 The Ld. adjudicating authority arrived at the conclusion that the amount of Rs.3,54,34,500/- which was paid purportedly by the appellant towards sponsorship of cricket tournaments namely, ICC World Cup and Indian Premier League, would be subject to levy of Service Tax under the provisions of law and the same is demandable from the appellant. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.Ex. S.T., Chandigarh-I [2020 (34) G.S.T.L. 456 (Tri. Chan.)] 4.3.4 The Ld. Advocate has also submitted that the Finance Act, 2010 substituted Section 65(105)(zzzn) to withdraw the exclusion for sponsorship of sporting events with effect from 01.07.2010, but the entire demand in this appeal is for the period prior to 01.07.2010 and as the said amendment was not made effective retrospectively, the demand cannot sustain for the impugned period. 4.3.5 In support of this contention, the appellant relied on the decision in the case of CIT v. Vatika Township [(2015) 1 SCC 1] which held that a legislation which modified rights or imposes new duties is presumed to have not intended retrospective operation unless a contrary intention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice 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 would mean the actual receipt of payment and not mere provisions created in the books of account, which are subsequently reversed and that this does not constitute consideration in the first place. 4.4.4 The appellant has relied on the decision of the Hon ble Karnataka High Court in the case of M/s. Karnataka Power Transmission Corporation Limited v. DCIT [(2016) 67 taxmann.com 259 (Karnataka)] wherein it was held that where the assessee has made provision towards contingent payment of interest on belated payment to its suppliers but has never paid the amount to the suppliers and has thereby made corresponding entries in the books of accounts, there would be no liability to deduct tax under Section 194A of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orship 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 condition that the service provider is under no obligation to provide anything in return to such donors; 8.2.1 Section 65(105)(zzzn) of the Act, as it stood prior to 01.07.2010, is reproduced below: - taxable service means any service provided or to be provided to any body corporate or firm, by any person receiving sponsorship, in relation to such sponsorship, in any manner, but does not include services in relation to sponsorship of sports events 8.2.2 From 01.07.2010 onwards, Section 65(105)(zzzn) came to be amended, as under: - taxable service means any service provided or to be provided to any person, by any other person receiving sponsorship, in relation to such spon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 sponsor BCCI/IPL without reference to the T-20 fixtures. We are not persuaded by any material on record that a huge amount of Rs. 4,80,00,000/- (for three years) was expended by appellant for deriving any commercial benefit out of its association with either GMR or BCCI/IPL alone. We are also not persuaded to infer that GMR and/or BCCI-IPL by themselves and unrelated to the T-20 cricket tournament/event would have any audience/viewership interest or footfall as to have any commercial utility whatsoever to the appellant. The sponsorship agreement is thus for sponsoring the T-20 sports event and not for sponsoring the owner of the Delhi Daredevils owner or the BCCI - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes 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 relevant legislative provision must thus receive a strict construction. A true and fair construction of the relevant legislative provision, in accordance with settled and applicable principles of statutory interpretation is therefore the non-derogable obligation of an executor/interpretator of legislation. It is also settled principle of statutory interpretation that where the verbal formula of a legislative provision on its grammatical construction corresponds to the legal meaning of the expression used, full faith and unreserved fidelity must be accorded to the provision. 15. We notice that the expression in relation to is understood to have an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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