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TMI Blog2025 (3) TMI 842X X X X Extracts X X X X X X X X Extracts X X X X ..... 02/- on player release fee paid to overseas cricket board under reverse charge basis Rs. 56,38,220/- on player transfer fee received from other franchisees. 2. The brief facts of the case are that the Appellant is a company incorporated under the provisions of the Company Act, 1956 having its registered office at M/s JSW GMR Cricket Pvt. Ltd. 88, Ground Floor, Tej Building. Bahadurshah Zafar Marg, Near ITO, New Delhi -110002. The appellant was engaged in the activities relating to sports including provisions of sports infrastructure, consultancy, organizing sports events, maintaining sports teams, construction, maintenance and taking on or leasing out stadiums (Indoor and outdoor) or player's ground, providing coaching to players, engaging umpires, ground men and undertaking other related sports and cultural activities etc. The Appellant is one of the Franchisee of the Indian Premier League organized by Board of Control of Cricket and therefore, is obligated to BCCI to form a team of Cricket players to participate in the tournament i.e. IPL. The Appellant was registered with the Service Tax Department, Delhi vide Registration No AADCG0588PST001 w.e.f. 18.03.2009. Initially the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-12 extended up to 2013-14 was conducted under Rule 5A of the Service Tax Rules, 1994, as amended (hereinafter referred to as the "Rules"). During the course of audit, following infractions were noticed which are discussed in the succeeding paras: A. Non-payment of service tax on Central Right income, CLT20 Participation Fees and Prize money received from Board of Control for Cricket in India - Indian Premier League (herein after referred to as BCCI-IPL) B. Non-payment of service tax on the Support Services of Business provided by overseas cricket professionals under reverse charge mechanism. C. Non-payment of service tax on Player Transfer Fees received from other Franchisees. D. Non-payment of service tax on Player Release Fees paid to Cricket Australia under reverse charge mechanism." Consequent to the investigations, the show cause noticed dated 23.04.2015 was issued proposing demand of service tax amounting to Rs.22,17,01,026/-, the impugned order dated 26.02.2021 confirmed service tax demand under several heads. The present appeal filed by the appellant before this Tribunal. 3. Learned counsel for the appellant submitted that the impugned order has been passed in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had agreed that BCCI-IPL shall have the exclusive right to exploit the Central Rights as owners. He stated that the Appellant along with other franchisees were entitled to 87.5% of all Central Licensing Income in respect of such income and only 12.5% was being retained by BCCI IPL. Therefore, the retention by BCCI IPL is in relation to management fees/administrative charges. The receipt of share of Central Rights Income by the appellant as a franchisee under the Franchise Agreement do not qualify as 'Business Support Service'. 3.2 Learned counsel further contended that the Commissioner has wrongly upheld the service tax demand on income received by the Appellant from Central Rights under the Franchise Agreement by categorizing the same as Business Support Service and the Commissioner has completely ignored the clauses of the Agreement including the recitals which makes it abundantly clear that the Appellant is not providing any business support to BCCI IPL. He submitted that the Franchise as defined in clause 1.1 of the Agreement is for establishing and operating the team pursuant to and as contemplated by this Agreement. Further, in order to become a franchise, the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icket South Africa. The Participation Fee was the money received by the Appellant for playing cricket in CLT 20 tournament and in no way was attributable to providing any support services to BCCI-IPL. In fact, he stated that the participation fee was receivable only by those teams who make to the CLT20 tournament and not by all the Franchisee teams. Therefore, the participation fee cannot be said to be in the nature of the support services that can be covered under the entry 'Business Support Service. 4. Learned Authorized Representative for the Revenue while reiterating the findings of the impugned order, submitted that huge revenue is being generated by the BCCI-IPL Twenty-20 cricket league with the participation of different playing teams raised by each of the franchisee including the one raised by the appellant. One of the conditions of the agreement executed between the franchisees and BCCI-IPL is that all of them including the appellant were required to raise cricket team comprising of 16 players for participation in the said league. In the absence of these teams, BCCI-IPL could not have held the T20 League. Besides, the appellant were obligated to stage all home league ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the terms/conditions of the above player's contacts, it was clear that the individual players have provided taxable services to the appellant by wearing apparels in the form supplied by the appellant and taking part in team endorsement events and other activities like sponsorship media and promotional activities referred to in the player agreement. BCCI-IPL and its franchisees are Business entities and are engaged in such business and commercial activities. The players have rendered their services in the capacity of professional cricketer to the appellant, a franchisee of BCCI-IPL for supporting their business. Therefore, the Commissioner had held that the activities carried out by players clearly fall under the category of "Support Service for Business or Commerce" as defined under section 65 (104c) of the Finance Act, 1994 and the same is liable to service tax as provided in section 65(105)(zzzq) of the Finance Act, 1994. 4.2 Learned AR further contended that the appellant had discharged their liability w.e.f. April, 2011 on an amount calculated @ 10% of the total amount being paid to the foreign players. This liability had been discharged under the taxable category of P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Service Tax-IV, Mumbai [2024 (17) CENTAX 315 (Tri.-Bom)] held as follows:- "With regard to the first issue whether, receipt of the appellant's share in the Central Rights Income should be considered as consideration as provision of the Business Support service, we find that the said issue has already been dealt with by the Coordinate Bench of this Tribunal, in the case of KPH Dream Cricket Pvt. Ltd. v. CCE & ST, Chandigarh-I (vice-versa), 2019 (5) TMI 1171 -CESTAT Chandigarh = 2020 (34) G.S.T.L. 456 (Tri Chan.). Upon consideration of such issue, the Tribunal by relying upon the decision of the Tribunal in the case of Mormugao Port Trust v. CCE -2017 (48) S.T.R. 69 (Tri.-Mum.) has set aside the demand holding that in case of joint venture contract, there is neither an intention to render a service to the other partner(s) nor is there any fixed consideration quid pro quo for any particular service of a partner. It has further been held that a contractor-contractee or the principal-client relationship, which is the essential element of any taxable service, is absent in the case of the partners or co-venturers in a joint venture agreement. In the present case, sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue has already been dealt with by the Co-ordinate Bench of this Tribunal, in the case of Sourav Ganguly v. Commissioner of Service Tax, Kolkata (Now Commissioner of Central Goods & Service Tax & Central Excise, Kolkata South), 2020 (12) TMI 534CESTAT Kolkata, wherein it was held that the view taken by the commissioner is not correct as the players had received the fees for the purpose of playing cricket only and even otherwise, it is a settled principle of law that if no machinery provision exists to exclude non-taxable service (playing cricket) from a composite contract, the same is not taxable since law must provide a measure or value of the rate to be applied and any vagueness in the legislative scheme makes the levy fatal. Thus, the Tribunal held in this case that the confirmation of demand could not be sustained. Considering 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. 47,55,082/- towards fees paid to foreign players on RCM basis and Rs, 20,13,565/- to the agents of foreign players are not sustainable." 9. Regarding the third issue, we note that the core requirement that the service w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received the amount on account of transfer of Mr. Dinesh Kartik to Mumbai Indians. The demand raised under the category of 'Manpower Recruitment or Supply Agency Service'. It is his submission that the appellant-assessee merely owns a franchise and ensures that the players forming the team in the matches organized by BCCI-IPL. When the player is transferred to another team, the appellant-assessee retains no right over him and the said player is obliged to undertake the activities as required by the other team. In fact, the player is simply sold to another team and that player does not play for the appellant-assessee for the entire period specified in the agreement. It is further submitted that the appellant-assessee is not engaged in providing services in relation to recruitment or supply of manpower i.e. the same is not its principal business. The appellant-assessee had not control over the player once the same is transferred to another team. Therefore, the activity cannot be taxed under the 'Manpower Recruitment or Supply Agency Service'. To support this, he relied upon the decision of Hon'ble Gujarat High Court in the case of CST v. Arvind Mills Limited - 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the department was well aware of all streams of receipts and the taxes paid by the Appellant is established- a. Instruction No. Dy/NO. 42/Comm (ST)/2008 dated 08.02.2008 wherein the Board had issued instruction for verification of facts and collection of service tax applicable on the franchisee/event. b. Letter No. F.No. / DGST/21(75) /Sponsorship/02/07/Mumbai dated 15.01.2009 wherein the Director General Service Tax has highlighted issues in respect of the IPL to various Commissionerates including Delhi. c. Standing Committee on Finance, as quoted at Page 31 in 38th report on Tax Assessment/Exemptions and Related matters concerning IPL/BCCI (August 2011), wherein the Board has stated that it has been vigilant since beginning of IPL and issued show cause notices where the opinion of department on taxability is different from that of assessed. d. The Department from time to time sought details from the Appellant which were regularly submitted. 12. We observe that these submissions have not been considered by the adjudicating authority. The table as submitted by the learned counsel is reproduced below:- Sr. No. Date on which notice received Date on which reply filed Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obligation to pay service tax. 6. 04.05.2010 19.05.2010 Details of Income received during IPL-2, IPL-3 along with details of service tax paid, details of invoices raised against the revenue realized and details of services provided to the appellant. 7. 11.06.2010 22.06.2010 The appellant submitted the details of invoices raised and sponsorship agreement entered by the appellant with various entities during IPL-2 & IPL-3. 8. 22.06.2010 29.11.2010 The appellant submitted the details of player who played IPL-3, copy of the service tax for the period from 01.04.2010 to 30.09.2010 and details of payment received from BCCI-IPL in respect of Central Media Rights. 9. 13.07.2010 20.07.2010 The appellant submitted the contract details and address of the sponsors of IPL-2 and IPL-3. 10. 31.08.2010 17.09.2010 The appellant submitted that the invoice raised towards services provided by wriglays is without service tax as service tax is discharged by Wrigleys under Sponsorship Services under reverse charge mechanism. Further, the appellant enclosed the challans of service tax as proof of payment of service tax paid by Wrigleys. 11. 05.05.2014, 15.05.2014 23.05.2014 The ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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