The Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that no service tax is payable by India Cements since the fees paid to foreign players as per contract to play in Indian Premier League.
Ms. Radhika Chandrasekar appeared for the appellant and Mr. R. Rajaraman appeared for the respondent.
The appellant is engaged in the manufacture of cement and has manufacturing units in Tamil Nadu, Andhra Pradesh & Maharashtra. The cement manufactured by them is sold under the brand names “Coromandel Cement, ‘Sankar Cement”, “Rasi Cement”, etc. They have Central Excise registration as well as Service Tax registration. The appellant is registered for various taxable services and also registered as Input Service Distributor.
A show cause notice was issued on the demand of Service Tax on payments made by the appellant to foreign players alleging that there is the import of services. The appellant had entered into agreements with the players to appoint them to play the matches, to fix the remuneration, and to set out the obligations on the side of the player as well as the appellant.
The Department has confirmed Service Tax on the fees paid to the foreign players on the ground that these players were rendering taxable service of Business Support Service to the appellant by playing the matches and also by taking part in promotional activities.
The appellant submitted that as individual players, they did not do anything towards the promotion of the business of the appellant. The players were engaged as professional cricketers and as employees of the franchisee (the appellant).
It was submitted that these players are members of the IPL team and were under a contract with the appellant by which the remunerations were fixed and obligations were stipulated in the agreement. In other words, they were employees of the appellant for the period of the IPL Cricket tournament. Therefore they did not have the status of independent entities and they cannot deal with the appellant on a principal-to-principal basis.
It was a fundamental requirement that for rendering business support service, the service recipient should be an independent business entity and has to be in principal to principal relationship. From the terms of the contract with the players, the two-member bench comprising Ms Sulekha Beevi C S, Member (Judicial) and Mr M Ajit Kumar, Member (Technical) that the appellant did not meet the ingredients required to fit into the category of business support services.
In light of the case of Umesh Yadav v. CCE – 2018 (2) TMI 136-CESTAT-Mumbai, it was held that on player’s fee, no service tax is payable by the appellant assessee and held that the demand, interest and penalties cannot sustain. The impugned orders are set aside and the appeals were allowed.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
