Case Law Details
Pinal Rohit Shah Vs C.C.E. & S.T.-Vadodara (CESTAT Ahmedabad)
Introduction: In a recent judgement by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), a crucial clarification was made concerning the taxability of remuneration earned by Indian Premier League (IPL) players. The case was between Pinal Rohit Shah and the Central Excise and Service Tax (C.E.&S.T.) department of Vadodara, revolving around whether the remuneration earned by Shah for brand promotion through his IPL agreement with Mumbai Indians falls under the Business Auxiliary Service, thereby attracting service tax.
Analysis: The key argument presented by Pinal Shah’s counsel was that the agreement between Shah and Indiawin Sports Private Limited (ISPL) was one of employment and that Shah’s engagement was not for brand promotion. The Counsel relied on several past judgments that supported their argument, declaring the service tax demand as not sustainable.
The Revenue, represented by Assistant Commissioner Vijay G Iyengar, reiterated the findings of the impugned order, which inferred that Shah’s engagement did involve brand promotion and thus should fall under Business Auxiliary Service.
CESTAT, upon careful consideration, held that the remuneration received was strictly for Shah’s involvement in playing cricket for the IPL team. They further cited previous verdicts and high court judgements, primarily Sourav Ganguly Vs. UOI & other – 2016, which stated that such arrangements are of employment, not direct brand promotion.
Conclusion: In conclusion, the tribunal held that the demand for service tax under Business Auxiliary Service was not applicable in this case. The judgement serves as a precedent and clarifies the taxability of IPL players’ earnings. It emphasises the role of IPL players as employees rather than active participants in brand promotion, providing significant implications for taxation and financial planning for sports professionals in India.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
Brief fact of the case are that the appellant is a cricket player and engaged in playing cricket in Indian Premier League for a team owned by M/s. Indiawin Sports Private Limited, Mumbai (ISPL for short) (formerly known as Rathipriya Trading Private Ltd). Under the agreement between ISPL and the appellant Shri Pinal Shah, the appellant received remuneration for playing cricket for ISPL. As regard the remuneration received from ISPL, the case of the department is that the appellant have provided the service of brand promotion which falls under the category of Business Auxiliary Service and the same is taxable under service tax. Therefore, the demand of service tax was raised.
2. Shri Nandan S. Soni, Learned counsel appearing on behalf of the appellant submits that as per agreement for playing cricket no behalf of M/s. Indiawin Sports Private Limited (ISPL) the same is for employment of the appellant with ISPL and the appellant received remuneration for the same. He further submits that the appellant is not engaged in the brand promotion of the any Company. Therefore, as per the agreement for employment of the appellant with ISPL it shall not attract service tax. This issue is settled in the following judgments:-
- Yusufkhan M Pathan vide CESTAT Order No. A/10086-10087/2023 dated 20.01.2023.
- Commissioner of Cus. &C.Ex., Goa Vs. Swapnil Asnodkar – 2018 (10) S.T.L. 479 (Tr. Mumbai).
- E, C & CGT – Delhi Vs. PiyushChawal – 2018 (7) TMI- 1009 – New Delhi
- Yogesh Takawake – 2019 (8) TMI 1693- CESTAT, Mumbai
- SouravGanguly – 2016 (7) TMI- 237- Calcutta High Court.
- Umesh Yadav – 2018 (2) TMI 135- CESTAT Mumbai
- Shri Karan Sharma – 2018 (4) TMI 111- CESTAT Allahabad
4. Shri Vijay G Iyengar, Learned Assistant Commissioner (AR) appearing for the Revenue reiterates the findings of the impugned order.
5. We have carefully considered the submission made by both the sides and perused the record. We find that the total amount of remuneration received is towards engaging the appellant by ISPL to play cricket in India Premier League matches. We find that in the identical agreements, in respect of other players engaged by different teams, in all those cased, this Tribunal relying on the High Court in the case of Sourav Ganguly Vs. UOI & other – 2016 (7) TMI 237- CALCUTTA HIGH COURT held that arrangement between the owner Company and the cricket player is of employment hence, players are not directly involved in brand promotion of a brand owner. Therefore, the activity of the cricket player does not fall under the category of Business Auxiliary Services. AS per this settles legal position, in the present case also involving similar agreement and arrangement, the demand of under Business Auxiliary Service does not sustain.
5. As per our above observation and findings, the demand raised in the impugned orders is not sustainable. Accordingly, the impugned order is set aside and the appeal is allowed in the above terms.
(Pronounced in the open court on 21.06.2023)
