Service Tax Demand On BCCI Subsidies Unsustainable: CESTAT Sets Aside ₹33.5 Cr Demand against Cricket Association [Read Order]

The Customs, Excise, and Service Tax AppellateTribunal (CESTAT) Eastern Zonal Bench set aside a service tax demand of ₹33,54,48,100 and held that the grants received from BCCI were not consideration for services but were subventions to promote cricket as a sport.

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​The issue arises from the Show Cause Notice that was issued in October 2015 demanding service tax from April 2010 to March 2015. The revenue department had alleged that services such as Event Management, Renting of Immovable Property, Business Support Services, etc., were provided by Cricket Association of Bengal [CAB] and subsidies were received from BCCI. The Principal Commissioner had confirmed the demand giving rise to cross appeals by both parties.

The appellant Cricket Association of Bengal(CAB) claimed that the amounts received as BCCI subsidy were in the nature of grants in aid for the promotion of cricket in accordance with their charitable obligations and not in consideration for any service rendered.

Moreover, the Doctrine of Mutuality is applicable as an association cannot be rendered any service to itself. Regarding CENVAT credit the Appellant further claimed that the service for transporting players is an integral part of their business and not for personal use.

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​The Bench comprising Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member), noted that "the activities of CAB are in the nature of bundled services aimed predominantly at promoting sporting events which are exempt under Notification No. 25/2012-S.T."

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​Further, the tribunal held that the BCCI subsidies are not taxable as there is no relationship in providing any service. The demand is also not sustainable as it is barred by limitation as the department is aware of the activities of CAB through continuous filing.

Therefore, the Tribunal set aside the entire demand, interest, and penalty.

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