The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has quashed the service tax demand against famous cricketers and brothers, Irfan Pathan and Yusuf Pathan holding that they are not liable to service tax under the “Business Support Service” for brand endorsement during IPL.
The appellants are international cricket players and they had entered into contract with the cricket team owners (known as franchisee) whereby they were employed/ engaged to play cricket for the respective teams in terms of the contracts for IPL seasons.
The service tax department made a service tax demand against the appellants under the business support service holding that the fees paid to the Appellants has been held to be liable to service tax under the service category of “Business Support Service”.
A bench of Member (Judicial), Mr. Ramesh Nair and Member (Technical), Mr. Raju observed that the apparel that they had to wearwas team clothing, which bears the brand/marks of various sponsors. The Appellants was not providing any service as an independent individual.
“In our opinion, it cannot be said that the appellants was rendering any services which could be classified as business support services. Appellants are not promoting any particular brand or product or service and also not taking part in any business activity of promoting the sale of any product or service of any entity. The entry for “Business Support Service” envisages taxing activities which are needed for doing business activities almost in the nature of outsourcing of activities connected with business. We find that the definition of “Business Support Service” does not specifically cover the activity done by Appellant,” the CESTAT said.
“Further, on perusal of the agreement title “Indian Premiere League Playing Contract” it clearly emerges that it is the appellant who is recognized as player first. Clause -2 of this agreement even makes it all the more clear that the franchisee is engaging players as professional cricketer who shall be employed by the franchisee. From this, it is abundantly clear that a person who has earned the reputation and recognition as a player is employed by the franchisee and it is not the other way round. The revenue while referring to clause -5 of the contract wants to impress that by virtue of the dress code, a player is obligated to his franchisee,” the CESTAT said.
Concluding the order, the CESTAT held that“On going through the clauses 5.2.,5.3,5.4 which prohibits commercial usage of supplied clothing. Therefore, if the same is considered as a binding condition, then its all the more strengthens the employer –employee relationship and we do not see anything wrong with employer prescribing uniform code with his employee. Further, as seen from the clause 2 and clause 8.1(b) read with other clause of the agreement , there is no doubt that appellant has been appointed/ engaged by the respective Franchisee under the agreement of “employment‟. The agreement create the relationship of “ employer –employee”.”
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