By TIOL News Service

MUMBAI, JAN 06, 2018: THIS is a Revenue appeal.

The Respondent is a Professional cricketer who entered into contract with M/s Jaipur IPL Cricket P. Ltd. who are franchisee owners of Indian Premier League (IPL) team Rajasthan Royals. For the period 2008 – 2012, he received a sum of Rs. 1.12 crores for playing for Rajasthan Royals.

Revenue sought to tax the said consideration under the category of Business Auxiliary Services on the ground that the amount received by him is towards playing for IPL and for promotional activities.

The adjudicating authority dropped the proceedings.

Revenue appealed to the Commissioner (Appeals) but without success and, therefore, is before the CESTAT.

The AR while reiterating the grounds of appeal submitted that in terms of the agreement the Respondent was to assist maximization of promotional benefits to Franchisee and others for which he received consideration and since the same was for promotion of brands or goods, the same is taxable under BAS.

The respondent while supporting the impugned order submitted that only 10% of the fee was towards promotion of brand and remaining 90% was towards match fee. That this amount was not taxable in view of Calcutta High Court judgment in case of SouravGanguly - 2016-TIOL-1283-HC-KOL-ST and Tribunal decision in Shriya Saran - 2014-TIOL-1290-CESTAT-DEL. Moreover, even the 10% amount of fee towards brand promotion had remained below the exemption limit in each year.

The Bench while relying upon the case laws cited observed -

++ though in the SCN, the Respondent was made liable to pay service tax but as rightly held by the adjudicating authority, no specific clause of Section 65 (19) defining Business Auxiliary service has been shown to be applicable to levy service tax. It is not appearing from the show cause notice as to what goods or services the Respondent has promoted or helped to promote. The Appellate Commissioner also on the same ground has held that the demand being vague is not enforceable against the Respondent . We do not find any reason to infer any different view than expressed by the lower authorities as without specifying the activity and the nature of service of the Respondent he cannot be taxed. Further out of the seven clauses under Section 65 (19) no clause has been pointed out under which the Respondent is liable for service tax.

++ we also find that as per the clause 4 and 4.8 of the agreement only 10% of the total sum receivable is towards Promotion of Brands of Goods, services and events and the remaining is towards match fees. The Brand promotion fee was not taxable until Negative list came into effect from 01.07.2010 and hence there cannot be any liability upon the Respondent till that period. Further, from the agreement it is explicit that the fee towards brand promotion which falls under Business Auxiliary Service has remained below the exemption limit of Rs.10 lakhs in respective years after 01.07.2010 and hence there is no liability upon Respondent to pay service tax.

Concluding that the respondent is not liable to service tax, the Revenue appeal was dismissed.

(See 2018-TIOL-92-CESTAT-MUM)