The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has recently ruled in favour of cricketer Ajitesh Argal, a former under-19 Indian Team player, that he is not liable to pay service tax on brand promotion payments received from Nike India during IPL.
The appellant, Ajitesh Argal received remuneration for playing cricket for KPH, an Indian Premier League team owned by M/s. KPH Dream Cricket Pvt. Limited. He also received a small consideration from M/s. Nike India Pvt. Limited for displaying their brand logo for promotion of their product.
As regards the remuneration received from KPH, the case of the department is that the appellant has provided the service of brand promotion which falls under the category of Business Auxiliary Service and the same is taxable under service tax.
Similarly, as regards the remuneration received from M/s. Nike India Pvt. Limited for participation in promotional activities, the impugned demand of service tax was raised by the Department.
Mrugesh Pandya, Counsel appearing on behalf of the appellant submitted that as per the agreement for playing cricket on behalf of M/s. KPH Dreams Cricket Pvt. Limited (KPH), the same is for employment of the appellant with KPH and the appellant received remuneration for the same during Indian Premier League (IPL) Matches.
He further submitted that the appellant is not engaged in the brand promotion of any Company. Therefore, it was contended that the agreement for employment of the appellant with KPH shall not attract service tax, and he quoted a bunch of rulings in his favour.
He further contended that after the deduction of remuneration received from KPH, the remuneration amount is much below the threshold limit of small-scale exemption under Notification No. 06/2005-ST dated 01.05.2005 and that the entire demand is not sustainable.
Rajesh K Agarwal, appearing for the revenue reiterated the findings of the impugned order.
The Service Tax Tribunal Bench observed that “the major amount of remuneration received is towards engaging the appellant by KPH to play cricket in Indian Premier League matches.”
It was thus held that “the activity of the cricket player does not fall under the category of Business Auxiliary Services. As per this settled legal position, in the present case also involving similar agreement and arrangement, the demand under Business Auxiliary Service does not sustain.”
Further, the bench observed that, since the remuneration received by the appellant from KPH does not involve any service, the appellant shall be eligible for small-scale exemption provided under Notification No. 6/2005-ST dated 01.05.2005 up to the threshold limit of gross value in a financial year.
Leaving the liberty of the revenue to verify the calculations for small-scale exemption threshold limit, the two-member tribunal bench of Ramesh Nair and C L Mahar quashed and set aside the impugned order of demand of Service Tax from the now Cricketer-Turned-Income Tax Inspector Ajitesh Argal.
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