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January 27, 2023

Brand endorsements during the IPL were exempt from service tax because they weren’t “business support services.”

by CA Shivam Jaiswal in Income Tax

Brand endorsements during the IPL were exempt from service tax because they weren’t “business support services.”

Fact and Issue of the case

Briefly the facts of the present case are that both the appellants are international cricket players and they had entered into contract with the cricket team owners (known as franchisee) whereby they were employed/ engaged to play cricket for the respective teams in terms of the contracts for IPL seasons. The fees paid to the Appellants has been held to be liable to service tax under the service category of “Business Support Service”. This view has been taken on the ground that Appellant wear the team clothing which bears the brands/ marks of various sponsors and they are also required to participate in promotional /public events of the franchisee thus they are providing Business Support Service. Based on such reasoning show cause notices were issued to the appellant for demand of service tax. After considering the reply, the adjudicating authority confirmed the service tax demand along with interest and imposed the penalties on Appellant. Being aggrieved, an appeal was filed before the Commissioner (Appeals) who vide impugned order-in-appeal rejected the appeal of appellant and upheld the order of the adjudicating authority. Hence, the present appeals before us.

On behalf of the appellants, Learned Advocate Shri Saurabh Dixit appeared and argued the matter. He submits that the agreement between the Appellant and franchisee is an agreement of “employment” as can be seen from the clause 2.2 and clause 8.1(b) read with other clauses of the agreement, and the same actually creates the relationship of “employer – employee”. Since, Appellant employed by the franchisee and the Appellant agreed upon the remuneration and benefit as mentioned in schedule -1 of the agreement. In addition to this, wearing the franchisee’s colour’s and design of cricket clothing, including marks and logos, it is also part of employment agreement and it cannot be construed as promotional activities.

The issue that arises for consideration is whether the activity carried out by the appellants would be taxable to service tax under Business support service. We find that though in the impugned order the appellants were made liable to pay service tax under the business support service but as, no specific entry as mention in above definition of “Business Support service” has been shown to be applicable to levy service tax. It is not appearing from the finding of the impugned order as how the activity of appellant covered under the above category of services. The apparel that they had to wear was team clothing, which bears the brand/marks of various sponsors. The Appellants was not providing any service as an independent individual. In our opinion, it cannot be said that the appellants was rendering any services which could be classified as business support services. Appellants are not promoting any particular brand or product or service and also not taking part in any business activity of promoting the sale of any product or service of any entity. The entry for “Business Support Service” envisages taxing activities which are needed for doing business activities almost in the nature of outsourcing of activities connected with business. We find that the definition of “Business Support Service” does not specifically cover the activity done by Appellant.

Observation by the tribunal

This Tribunal also in various decisions viz. Shri Karn Sharma Vs. Commissioner of Central Excise & S.T, Meerut-l Appeal No. ST/59766/2013-CU(DB) (Tri-Allahabad), Commissioner of Cus, & C. Ex., Goa vs. Swapnil Asnodkar 2018[10] G.S.T.L. 479 (Tri-Mumbai) & Umesh Yadav vs. Commissioner of Central Excise, Nagpur Appeal No. ST/85079/15 and ST/85381/15 (Tri.-Mumbai) while relying upon the decision of the Hon’ble Calcutta High Court in Sourav Ganguly’s case (supra) have taken a similar view and held that the cricket player is not liable for service tax under Business Support Service.

In view of the above, we are also of the opinion that the remuneration received by the respondent from the franchisee M/s KPH cannot be taxed as ‘Business Support Service’ and therefore, the appeal filed by the department is rejected.


After hearing both sides, we find that Hon’ble Calcutta High Court in the case of Shri Sourav Ganguly Vs Union of India and Others reported at 2016 (43) STR 482 (CAL) 2016-TIOL-1283-HC-KOL-ST has dealt with an identical issue better appreciation of the issue before the Hon’ble Calcutta High Court, we are reproducing para no.68 of the said order:

68. As regards the remuneration received by the petitioner for playing JPL cricket, in my opinion, the service tax demand raised on such amount under the head of ‘Business Support Service’, is also not legally tenable. According to the Department, the terms of the contract that the petitioner entered into with M/S. Knight Riders Sports Pvt. Ltd. would reveal that the petitioner’s obligation was not limited to displaying his cricket skills in a cricket match. He also lent himself to business promotional activities. Thus, he provided taxable service when he wore apparel provided by the franchisee that was embossed with commercial endorsements or when he participated in endorsement event. The Department admits that the fee charged for playing the matches will fall outside the purview of taxable service. However, the Department contends that the petitioner has been paid composite fee for playing matches and for participating in promotional activities but the component of promotional activities could not be segregated for charging service tax. Accordingly, service tax is chargeable on the composite amount. For this contention, the Department relied on the letter dated 26 July, 2010 issued by the Central Board of Excise and Customs which is also under challenge in this writ petition.

In his order dated 12 November, 2012 the Respondent No. 3 has held that the petitioner has received substantial remuneration from IPL franchisee (Knight Riders Sports Pvt. Ltd.) for rendering of promotional activities to market logos/ brands/ marks of franchisee/ sponsors. Such fees/ remuneration have been paid to the petitioner by the franchisee in addition to his playing skills and thus the services rendered by the petitioner are classifiable under the taxable service head of Business Support Services’ as per the provisions of Sec. 65(104c) read with Sec. 65(105) (zzzzq) of the Finance Act, 1994. There appears to be inherent inconsistency in such decision of the Respondent No. 3. Sec. 65(105) (zzzzq) pertains to brand promotion whereas Sec. 65(104c) pertains to business auxilary services. They are two distinct and separate categories. As already indicated above, the taxable head of brand promotion was not in existence prior to July, 2010, hence, reliance on that head for levying tax on the amount received by the petitioner from the IPL franchisee is misplaced and misconceived. This is sufficient to vitiate the order.”

While deciding the above issue Hon’ble Calcutta High Court has held as under: –

69. Further, find from the contract entered into by the petitioner with the IPL franchisee that the petitioner was engaged as a professional cricketer for which the franchisee was to provide fee to the petitioner. The petitioner was under full control of the franchisee and had to act in the manner instructed by the franchisee. The apparel that he had to wear was team clothing and the same could not exhibit any badge, logo, mark, trade name, etc. The petitioner was not providing any service as an independent individual worker. His status was that of an employee rather than an independent worker or contractor or consultant. In my opinion, it cannot be said that the petitioner was rendering any service which could be classified as business support service. He was simply a purchased member of a team serving and performing under KKR and was not providing any service to KKR as an individual. In this regard, fully endorse and agree with the order dated 6 June, 2014 passed by the Commissioner of Central Excise (Appeals). Delhi-ll in Appeal Nos. 330-332/ SVS/RTK/2014, the facts of which case was similar to the facts of the instant case, excepting that the player concerned in that case was a member of the Chennai Super Kings.

As seen from the above decision Hon’ble Calcutta High Court has held that no service was provided by the player, nor requiring him to discharge any service tax.

Accordingly, by following the said decision of Hon’ble Calcutta High Court we set aside the impugned order and allow the appeal with consequential relief to the appellant.

In view of above judgments and our observation, we are of the view that the Appellants are not liable to service tax under the “Business Support Service”.

In view of the above discussion, we hold that the demands of service tax are not sustainable against the appellants. Therefore, the demands confirmed by way of impugned order are set aside. In the result, the appeals filed by the appellants are allowed with consequential relief, if any, as per law.

Read the full order from here



The tribunal has ruled in favour of the assessee and dismiss the appeal.

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