Ahmedabad CESTAT recently allowed CENVAT Credit on Sponsorship Service of Baroda Marathon finding that sponsorship service sports events are more or less relates to advertisement or sales promotion of manufactured goods.
The question before the single bench was whether the appellants are eligible to CENVAT credit of Service Tax paid on sponsorship service of Baroda Marathon and other events during the period December 2013 to September 2014.
It was contended on behalf of the appellant-assessee that sponsorship service has been considered as an act of promotion of the brand name. Further, by undertaking sponsorship of various sports events, they advertise their product. It was therefore, contended that since the sponsorship service is having nexus with manufacturing business, Cenvat credit is allowable.
The Single bench agreed with the above contentions on the basis of the decision of the Hyderabad Tribunal in Xilinx India Tech Services P. Ltd. vs. C.C.C.E. & S.T., Hyderabad.
Dr. D.M. Misra, Judicial Member set aside the impugned order and held that “Also, I am of the view that sponsorship service sports events more or less relates to advertisement or sales promotion of manufactured goods, hence fall within the scope of input service as defined under Rule 2(l) of the Cenvat Credit Rules, 2004.”
Read the full text of the Order below.