By TIOL News Service

NEW DELHI, NOV 07, 2014: THE appellant entered into an agreement with KPH Dream Cricket Pvt. Ltd. for sponsoring the cricket team Kings XI Punjab. On the said contractual consideration, a service tax of Rs.37,08,000/- was collected by M/s KPH from the appellant and deposited with the Central Government under the category of Business Auxiliary Service. This is the factual position and there is no dispute.

Nonetheless, at a later date, the Revenue entertained a view that the agreement between the appellant and M/s KPH was falling under the category of "Sponsorship Service" and, as such, the tax liability falls on the appellant on reverse charge basis.

Notwithstanding that ST already stood paid by M/s KPH, proceedings were initiated against the appellant for recovery of the said tax amount of Rs.37,08,000/- and the adjudicating authority had no qualms in confirming the demand with interest and penalty.

The Commissioner (A) too found this order proper and legal and so dismissed the appeal filed by the appellant.

This is what the Commissioner (Appeals) noted -

"5.3 Although the amount of service tax has been paid by the appellant and deposited by KPH under the taxable head business auxiliary service. But in view of the instructions of CBEC No. 42/Comm (ST) dated 8th February 2008 sponsorship of a cricket team may not be outside the scope of sponsorship service and service tax is required to be paid by the appellant. As the service tax is paid the service tax for their own tax liability the appellant is required to pay service tax on the services rendered by them under sponsorship service which is independent tax. Case laws cited by appellant 2010 (18) STR 803 (Com. A) and - 2008-TIOL-2156-CESTAT-AHM does not support their case as in this case classification of services rendered has changed from business auxiliary services to independently classifiable services namely sponsorship ship."

The appellant is, therefore, before the CESTAT and narrates the undisputed facts.

The Bench observed –

"5. Apart from noting that the issue of sponsorship of cricket has been held to be not covered by the sponsorship service, by the Tribunal in the case of Hero Motocorp Limited vs. CST, Delhi reported in - 2013-TIOL-873-CESTAT-DEL, which would not cast any obligation on the appellant to discharge service tax, we also note that the service tax on the same transaction already stands deposited by M/s KPH, under the category of Business Auxiliary Services. Demand of service tax in respect of the same transaction on the ground that the deposit of service tax was under a different category whereas a different category of service has been provided cannot be held to be justifiable."

The order of the lower authority was set aside and the appeal was allowed with consequential relief.

(See 2014-TIOL-2198-CESTAT-DEL)