CSK Players not liable to pay Service Tax on Remuneration paid by Franchisee: CESTAT [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai bench has granted relief to the cricket players L Balaji, Ashwin R, Murali Karthik, Dinesh Karthik, S Badrinath, Vidyut Sivaramakrishnan, Aniruda Srikkanth, Suresh Kumar, Yo Mahesh, Hemang Badani, C. Ganapathy, Arun Karthik K B, Kaushik Gandhi and Palani Amarnath by holding that these players are not liable to pay service tax on the amount received from the franchise.

The department proceeded against the cricket players representing various Teams owned by various franchises in the IPL by observing that the assessee’s were providing Business Support Services up to 30.06.2010 and Business Promotion Services for the subsequent periods.

On the first appeal, the Commissioner(A) set aside that portion of the demand pertaining to the period up to 30.06.2010 raised under BSS and upheld the balance service tax demand for and from 01.07.2010 onwards under Business Promotion Services.

The Tribunal observed that the categorization of the same set of activities under two different services for two different periods is not permissible.

It was held that having taxed under BSS, the Revenue should not have changed its stand for a different period (and contended that the services are taxable under BPS) when there is no change in the nature of services alleged

The Tribunal further noted that in this case, the decision of the Kolkata High Court in the case of Sourav Ganguly is required to be followed.

“there exists employer-employee relationship, the players are paid remuneration and, therefore, there is no service which is liable to be brought under the tax net for both the periods under the alleged heads and accordingly, the department appeals are dismissed and the assessee’s appeals are allowed,” the Tribunal said.

It was also observed that the money was not given by the franchise, rather it is the money received from BCCI directly for winning and not towards any services – Hence, the prize money could never be included in the taxable value.