CESTAT gives clean chit to Former Skipper, Sourav Ganguly in an old Service Tax dispute [Read Order]

The Customs, Excise, Service Taxes Appellate Tribunal (CESTAT) quashed the demand of service tax against the Former  Skipper Sourav Ganguly in an old Service Tax dispute.

The dispute was over a tax liability of Rs 1.51 crore. The issue raised in this case was whether a celebrity prompts only a brand that cannot be construed as brand endorsement.

The petitioner, Sourav Ganguly, pleaded the direction against the order passed by the Commissioner of Service Tax, Kolkata confirming the demand of service tax under “business auxiliary service” and “support services of business or commerce”3 with interest and penalty.

It has been pointed out by the learned counsel of the appellant, J.K Mittal that brand endorsement/brand promotion services were made taxable w.e.f July 1, 2010 by introducing sub-clause (zzzzq) in section 65(105) of the Finance Act, and the appellant sought registration for the above-mentioned activity which was granted on August 3, 2010, whereafter the appellant paid service tax from July 1, 2010 for the services relating to brand endorsement/brand promotion. The contention, therefore, is that no demand could have been made or confirmed for this service for the period May 1, 2006 to June 30, 2010 under BAS.

The coram headed by the President Justice Dilip Gupta set aside Service tax liability amounting INR 1.51 crores against him, specifying that in case if the brand name/house mark is promoted by a celebrity, without reference to any specific product or services, the service would not be classified under business auxiliary services and hence not taxable under Service tax law during that time.

The Tribunal while giving the clean chit to the appellant stated that the demand confirmed by the Commissioner is being set aside as there is no reason why the appellant should not be granted interest on the amount of Rs. 1,51,66,500 and 50,00,000 deposited with the Government from the date of deposit of the amount upto the date of transfer of the said amount to the Registrar General of the High Court.

The CESTAT further clarified that the appellant shall also be entitled to interest on the amount of Rs. 1,51,66,500 and Rs.50,00,000 from the date of deposit of the amount with the Government upto the date the amount was transferred to the Registrar General of the Calcutta High Court at the rate of ten percent per annum within the period of one month