Fees paid to Ishant Sharma by Knight Riders is for playing cricket hence service tax not leviable

Ishant Sharma Vs Commissioner of Central Excise and Service Tax (CESTAT Delhi)

CESTAT Delhi held that player fees paid to Ishant Sharma by M/s. Knight Riders Sports Private Limited under the contract is for the activity of playing cricket and not for any promotional activity. Hence, service tax not leviable on the same under ‘Business Support Service’.

Facts- The appellant, Ishant Sharma, plays cricket at the National and International Level. By an agreement, the appellant was engaged by the Knight Riders to play cricket in the Indian Premium League for three seasons commencing from 2008.

The show cause notice was issued to the appellant alleging that in terms of the Agreement, the payments received by the appellant would be taxable under ‘business support services’, as the appellant granted rights to Knight Riders to get photographed, filmed, televised, identified, record his performance and had agreed to wear and use only team clothing.

The Commissioner confirmed part of the demand of service tax with applicable interest by taking recourse to the extended period of limitation contemplated u/s. 73(1) of the Finance Act. For the period prior to July 2012, the Commissioner, based on clause 4.8 of the Agreement, held that only 20% of the consideration received by the appellant pursuant to the Agreement would be attributable to promotional activities and liable to service tax. The Commissioner, therefore, dropped the demand for the balance 80% of the player fees. For the period post 2012, the Commissioner confirmed the demand for the entire amount of remuneration received by the appellant.

Please become a Premium member. If you are already a Premium member, login here to access the full content.