No Service Tax Liability on Tournament Subsidy Received for Sponsorship: CESTAT Sets Aside Demand Against Punjab Cricket Association [Read Order]

The assessee, Punjab Cricket Association, is registered for providing Mandap Keeper Services, Health & Fitness Centre, Club & Association Service, Selling of Space, and Event Management Services.

During an audit for the period from 1 April 2007 to 31 March 2009, Revenue observed that the appellants had received an amount of ₹12,49,287 as a tournament subsidy from Procam International and had not discharged service tax on the same.

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On enquiry, the appellants explained that the amount was received for the Inter-School Tournament conducted by the District Cricket Association and was transferred entirely to the District Association.

A show-cause notice (SCN) was issued and subsequently confirmed by the adjudicating authority. The appeal filed before the Commissioner (Appeals) was dismissed by the impugned order. Aggrieved, the appellants approached the Tribunal.

Before the Tribunal, the appellants submitted that they had merely received the payment from Procam International and transferred the same to the District Cricket Association, which conducted the tournament. The counsel pointed out that Procam International made similar payments to other State Cricket Associations on behalf of their clients, Parle G and Boost, and in all such cases, the amounts were transferred to the respective District Cricket Associations without any tax being demanded by Revenue.

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The appellant further argued that there was no agreement or contract between Procam International and the appellants. Hence, the appellants could not be said to be providing Business Auxiliary Service and contended that at best, the activity could fall under Sponsorship Service, where in terms of Notification No. 16/2006-ST dated 25 July 2006, the liability to pay tax is on the recipient of service.

The Bench comprising S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) observed that revenue had not produced any evidence to show that the appellants rendered any service to Procam International or that there was any contractual relationship between them.

The Tribunal noted that Procam International was making payments on behalf of Parle G and Boost towards sponsoring inter-school tournaments and that the appellants merely transferred the amounts received to the District Cricket Associations. The Bench held that the appellants were not promoting the business of Procam International, as its name was not advertised or publicized anywhere by the appellants.

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The tribunal concluded that the service involved was a Sponsorship Service the liability to pay service tax rests with the recipient of the service. As no evidence was found of taxable service rendered by the appellants and no merit in the department’s demand, the Tribunal allowed the appeal and set aside the impugned order.

Accordingly, the CESTAT held that there was no service tax liability on the tournament subsidy received for sponsorship and set aside the demand raised against the Punjab Cricket Association.

The assessee was represented by Sudeep Singh Bhangoo, while Kanish Saini appeared for the Revenue.

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