The New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the demand for service tax amounting to Rs. 59,28,053/- against the cricketer Ishant Sharma on the ground of the activity undertaken by the assessee according to the contract of employment would not be a service and not leviable to service tax.
Ishant Sharma, the appellant assessee plays cricket at the National and International Level, and by an agreement, the assessee was engaged by the Knight Riders to play cricket in the Indian Premium League for three seasons commencing from 2008 and the assessee had been employed by the Knight Riders to play cricket in the IPL tournaments was under the control of Knight Riders and had to act in the manner instructed by them.
The assessee appealed against the order passed by the Commissioner of Central Excise and Service Tax for confirming the service tax demand along with interest and penalty by invoking the extended period of limitation contemplated under the provision to section 73(1) of the Finance Act, 1994.
Reena Khair, Vrinda Bagaria, and Subham Jaiswal, the counsels for the assessee contended that the assessee had been engaged by Knight Riders to play cricket, which was not a taxable service under the Finance and the contract with Knight Riders was an employment contract, and the relationship was that of an employer and employee, which was also not taxable under the Finance Act.
Shreya Dahiya, the counsel for the assessee further contended that the definition of “taxable services” under section 65 of the Finance Act did not include any activity carried out by a person during his employment and the Agreement between the assessee and the Knight Riders was that of employment and therefore not taxable under the prescribed law.
Also stated that the amount was merely to retain the player and to block him from playing for any other team or tournament during the Indian Premier League (IPL).
Radhe Tallo, the counsel for the department relied on the decisions made by the lower authorities and contended that in terms of the Agreement, the payments received by the assessee would be taxable under “business support services”, as the assessee granted rights to Knight Riders to get photographed, filmed, televised, identified, record his performance and had agreed to wear and use only team clothing.
The Bench observed that the entry for “Business Support Service” envisages taxing activities that are needed for doing business activities almost like outsourcing of activities connected with business and the definition of “Business Support Service” does not specifically cover the activity done by the assessee and would not liable to pay service tax.
The two-member bench comprising Dilip Gupta (President) and Anjani Kumar (Technical) quashed the service tax demand raised by the department to the assessee while allowing the appeal filed by the assessee.
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