TMI Blog2023 (8) TMI 1395X X X X Extracts X X X X X X X X Extracts X X X X ..... M/S JAIPUR IPL CRICKET PVT. LTD. VERSUS PR. COMMISSIONER OF SERVICE TAX-IV, MUMBAI AND (VICE-VERSA) [ 2023 (6) TMI 1339 - CESTAT MUMBAI] where it was held that We also take note of the fact that BCCI is not commercial organization and only organizing game of cricket. Therefore any service rendered to BCCIIPL is not in the nature of support of business of BCCI. Therefore, on that ground also; no service tax is payable by the appellant-assessee - From 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 - the demand under this head cannot sustain and requires to be set aside. Demand of Service Tax under the category of sale space or time for advertisement - HELD THAT:- 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 (6) TMI 447 - CESTAT NEW DELHI ] and in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 and 19.01.2010 in respect of IPL season 2 3. The appellant was successful in bidding for contracted players including foreign origin and completed a team of 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 2.10 Secondly, scrutiny of the ledgers of appellant indicated that they accounted income from sale of tickets. The tickets were sold by the appellant through various methods like Gate sales, Counter sales, Showroom sales, etc.,. It appeared to Department that appellant was rendering the service of providing opportunity to see live matches . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 agreement, which included attire branding, man media campaign etc.,. On perusal of the rights given to Aircel Ltd., vide the agreements it was seen that appellant was rendering the taxable service of 'sale of space or time for advertisement service' to Aircel. As per the sponsorship agreement Aircel has to pay the stipulated amount as sponsorship fee to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 to retain certain rights termed as the 'Central Rights' while it allowed the Franchisee to have certain other rights. The agreement also specified the terms of payment made by the franchisee to the franchiser for the franchise granted. It also had certain clauses for sharing of the income generated as a result of certain rights reserved by the BCCI-IPL and by holding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted 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 agreement that the appellant has to provide a particular service for receiving this share of central rights income. 6. The Ld. counsel submitted that there are no services rendered by the appellant to BCCI-IPL which can be classified as BSS in regard to the receipt of revenue share in the nature of central right income referred in the agreement. The adjudicating authority has ignored the fundamental fact that in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and time for advertisement on the amount received under the sponsorship agreements entered by the appellant with various companies, the Ld. counsel submitted that the original authority had issued the Show Cause Notice applying Section 65 A and classifying the service as sale of space and time for advertisement alleging that the main activity as per the sponsorship agreement is sale of space and time for advertisement. This view taken by the Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and demand Service Tax under the said category. 14. Thirdly, it is alleged in the Show Cause Notice that the appellant is liable to reverse CENVAT Credit under Rule 6(3) for the reason that they are providing both taxable as well as exempted services. The Department has construed the activity of selling tickets as an exempted service. It is alleged that by sale of tickets, the appellant is Providing Opportunity to See Live Matches . It is argued by the Ld. counsel that there is no service classified as sale of tickets and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere 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. Though, the Show Cause Notice is issued invoking the extended period under proviso to Section 73(1) of the Finance Act, 1994, the Department has not been able to produce any evidence to show that the appellant has deliberately suppressed facts with intent to evade payment of duty. All the documents, agreements, invoices and details of amounts received were accounted by the appellant and well within the knowledge of the Department. Further the issue is interpretational as there were several litigation pending before the various forums in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 resources and contribution of a partner enter into a common pool of resource required for running the joint enterprise and if such an enterprise is successful the partners become entitled to profits as a reward for the risks taken by them for investing their resources in the venture. A contractor-contractee or the principal-client relationship which is an essential element of any taxable service is absent in the relationship amongst the partners/coventurers or between the co-venturers and joint venture. In such an arrangement of joint venture/partnership, the elemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... magined 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 accordingly of the view that there is no service that has been rendered by the Appellant, much less the taxable service of renting of immoveable property. The money flow to the Assessee from SWPL, under the nomenclature of Royalty, is not a consideration for rendition of any services but in fact represents the Appellant's share of revenue arising out of the Joint Venture being carried on by the Assessee and SWPL. The said decision has been affirmed by the Hon ble Apex Court (supra). 7. Further in the case of Sir Ganga Ram Hospital (supra), wherein it was held that if there is Revenue sharing by the doctors wherein some part of fees ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 of 2011. The core reason recorded for disallowing the claim of the appellant herein is that while T-20 matches played under the banner of IPL are clearly sports events, BCCI/ IPL cannot be imagined to be a sporting event. The authority records that from the agreement dated 18.04.2008 (the relevant sponsorship agreement), the assessee was appointed the official partner as set out in clause 2 thereof and franchisee rights accrue to the assessee for a consideration (sponsorship fee) paid to the BCCI/ IPL; and the terms and conditions in the sponsorship agreement clearly disclose that the assessee had made the payment to the BCCI/ IPL, not for a T-20 tournament of any cricket match but to BCCI/ IPL, which it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stain 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 appellant-assessee s revenue generated from stadium gate receipt, prize money received from BCCI-IPL and in-stadia sale i.e., stadium revenue. In this regard, we find that the issue has already been examined by Co-ordinate Bench of this Tribunal, in the case of L Balaji and Others Vs. CCE ST, Chennai (vice-versa), 2019 (5) TIOL 1882 CESTAT Mad. and M/s KPH Dream Cricket Pvt. Ltd. (supra). Upon consideration of such issue, the Tribunal had held that no Cenvat credit is required to be reversed in the above situation as follows: In re- L Balaji and Others 7.5 The next point urged on behalf of the assessees is that the working of the taxable value where the Revenue sought to include, for the year 2011-12, the prize money. It is not disputed by the Revenue that the prize money was not g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 reads as under:- 10. The Revenue sought to demand service tax from the appellant-assessee for the fee paid to overseas players under the category of Business Support Service. 11. The case of the appellant-assessee is that they are under the obligation to raise a team of 16 players for which the appellant-assessee entered into an agreement with various players including players of foreign origin. The agreement specified that the players were engaged as professional cricketers and will be provided with player fee. The players were given a consolidated consideration for fulfilling all their obligations under the agreement, which included playing cricket and participating in league activities relating to promotional events. The players spent majority of their time playing cricket which is not taxable service. If a player is unable to play matches for the team, then h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he classification from business support service to brand promotion service suo motu and unilaterally which is not permitted under law. Further, we find that this issue has been settled in favour of the assessee by various decisions relied upon by the appellant-assessee cited supra. Therefore, by following the ratio of the said decisions, we are of the considered opinion that the impugned order passed by the Commissioner (Appeals) going beyond the show cause notice is not sustainable in law and, therefore, we set aside the impugned order and allow the appeal of the appellant-assessee. We also find that the department is also holding the view that the appellant is not liable to tax under the category of brand promotion service. Consequently, we do not find any merit in the department s appeal in view of the various decisions cited supra. 15. Therefore, we hold that on player s fee, no service tax is payable by the appellant-assessee and in Appeal No. ST/597/2012, the Commissioner has rightly been dropped the demand of service tax on player s fee. 23. From the foregoing, we have no hesitation to conclude that the demand, interest and penalties cannot sustain. The impugned orders are s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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