Service Tax : Remuneration received by cricketers for writing articles or anchoring TV shows or playing IPL matches, cannot be charged to service tax under Business Auxiliary Services or Business Support Services

Service Tax : Remuneration received by cricketers for writing articles or anchoring TV shows or playing IPL matches, cannot be charged to service tax under Business Auxiliary Services or Business Support Services

Service Tax : Brand promotion services were brought under service tax by way of Section 65(105)(zzzzq) of the

Finance Act, 1994 from 1-7-2010; hence, for period prior thereto, they were not liable to service tax

• Facts : During May 2006 to June, 2010, assessee-cricketer received amounts under following heads

♦   Writing Articles in Magazines ;

♦   Anchoring TV Shows ;

♦   Brand Endorsement ; and

♦   Playing Cricket in IPL.

• Department raised demand of service tax under 'Business Auxiliary Service' or 'Business Support Service' and invoked extended period.

Held : It was held that —

  POINT DECISION

 

1.   Writing Articles in Magazines

Writing articles for newspapers or sports magazines or for any other form of media cannot by any stretch of imagination be said to be amounting to rendering business auxiliary service within the meaning of Sec. 65(19) or business support service under Sec. 65(104c) of the Finance Act, 1994. Writing article for publication in a media is for the benefit of the readers who have interest in the concerned topic. The assessee wrote articles for media, primarily for the sports lovers. It would be preposterous to suggest that in writing such articles the object of the assessee was to advance any business or commercial venture. The articles were meant for information and even entertainment of the general public interested in sports. An article written by a celebrity in an issue of a magazine may to some extent boost the sale of that issue but I do not think it can be said that the object of the author in writing the article or permitting publication thereof was to promote circulation of the concerned magazine. That might be an incidental effect but the same cannot foist service tax liability on the author of the article. Hence, the remuneration received by the assessee for writing articles would not attract service tax.

 

2.   Anchoring TV Shows

For similar reasons, the remuneration received by the assessee for anchoring TV shows cannot be brought within the service tax net. Television shows are meant for entertainment of the viewers. In contemporary world watching television is a primary form of recreation. It would be absurd to say that anchoring TV shows amounts to rendering business auxiliary service or business support service. By anchoring a TV show, a celebrity or for that matter any other person does not render service with the object of enhancing any business or commercial interest. No reasonable authority with proper application of mind could classify anchoring of TV show as business auxiliary service or business support service. Hence, the remuneration received by the assessee for anchoring TV shows does not attract service tax.

 

3.   Brand Endorsement

Since by amendment of the Finance, Act, 1994, a new taxable service category of 'Brand Promotion' was introduced with effect from 1 July, 2010, the logical corollary and inevitable inference is that such category of service was not taxable prior to 1 July, 2010. Business auxiliary service and brand promotion are distinct service heads. Since brand endorsement was not a taxable service during the period of time for which the tax demand has been raised, such demand cannot be sustained. Such service rendered by the assessee could not be taxed under the head of business auxiliary service as has been sought to be done.

 

4.   Playing Cricket in IPL

Service tax demand raised on such amount under the head of 'Business Support Service', is also not legally tenable. The assessee was engaged as a professional cricketer for which the franchisee was to provide fee to the assessee. The assessee 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 assessee 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. Hence, it cannot be said that the assessee 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.

 

5.   Extended period

Since assessee had been submitting all relevant details from time to time and since notice could not bring out how there was suppression of facts, etc., hence, extended period cannot be invoked and demand is hopelessly time-barred.

 

6.   Circular/ Letter/ instruction dated 26 July, 2010

This instruction says that in case the players (in IPL) are paid composite fee for playing matches and for participating in promotional activities, the component of promotional activities should be segregated for charging service tax and if it cannot be done then service tax should be leviable on the total composite amount. Held that, CBEC in its administrative capacity is not entitled to impose its views on its various subordinate authorities exercising quasi-judicial functions to interpret a particular provision of a statute in a particular manner. The statutory provisions relating to service tax do not provide that the fees received by an IPL player would attract service tax. If the statute does not provide for levying service tax on fee received for playing matches, such a liability cannot be created by issuing a letter/instruction/circular. Accordingly the impugned circular/instruction dated 26 July, 2010 is quashed to the extent it states that if composite fee received for playing matches and for participating in promotional activities cannot be segregated, then service tax should be levied on the total composite amount.

[2016] 71 taxmann.com 60 (Calcutta)

HIGH COURT OF CALCUTTA

Sourav Ganguly

v.

Union of India