Relief for Robin Uthappa: CESTAT Rules IPL Payments Are ‘Player Fee’, Not Taxable as Promotional Activity Under BAS [Read Order]

The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that payments received by a professional cricketer for participating in Indian Premier League (IPL) matches are ‘player fee’ and cannot be considered as promotional activity taxable under the category of ‘Business Auxiliary Services’ (BAS).

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Robin Uthappa, the appellant, is a professional Indian cricketer who entered into an agreement with Royal Challengers Sports Pvt. Ltd. (RCSPL) to play in IPL matches. He received payments under the contract, which were described as ‘player fee’ based on his participation in the matches.

The department held that the player, by wearing jerseys displaying brand names like Kingfisher, promoted the commercial interests of the franchise and its sponsors. Based on this reasoning, the Commissioner (Appeals) confirmed that the service was taxable under ‘Business Auxiliary Services’. Aggrieved by this decision, the appellant challenged the order before the CESTAT.

The appellant's counsel argued that the payments were strictly for playing cricket, and not for any brand promotion. They submitted that if the player was unavailable, the fee was reduced accordingly, showing the payment was performance-based. The counsel further argued that there was no clause in the contract that required the appellant to promote or market any product or brand.

The revenue counsel argued that by wearing jerseys bearing sponsor logos, the player was actively involved in promoting those brands. The counsel argued that the agreement with the franchise allowed commercial use of the player's image, which qualified as brand promotion and fell under BAS.

The two-member bench comprising P.A. Augustian (Judicial Member) and R. Bhagya Devi (Technical Member) referenced the case of Sourav Ganguly v. CCE, where the tribunal observed that payments received by the cricketer were solely for playing cricket in terms of the agreement with the franchise, and not for any brand promotion activity.

The tribunal further observed that wearing jerseys with sponsor logos did not amount to rendering taxable service under ‘Business Auxiliary Services’, as there was no contractual obligation to promote or endorse any brand.

In the view of the Sourav Ganguly case, the tribunal held that the IPL payments received are ‘Player Fee’ and are not taxable under ‘Business Auxiliary Services’. The appellant’s appeal was allowed and the impugned order was set aside.

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