Wednesday, July 6, 2016

Calcutta HC quashes Rs 1.5 cr. service tax demand on Sourav Ganguly

Facts

a. Assessee (Sourav Ganguly) was former captain of the Indian Cricket Team. He participated in the IPL Cricket tournament as a member of the Kolkata Knight Rider’s Team. He also acted as brand ambassador for various products and anchor in television shows.

b. He 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 of Rs. 1.5 crores under ‘Business Auxiliary Service’ or ‘Business Support Service’ and invoked extended period. The assessee filed writ petition and challenged the demand.

The Calcutta High Court held as under :

1. 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 or business support service. Hence, the remuneration received by the assessee for writing articles would not attract service tax. 

2. Television shows are meant for entertainment of the viewers. The remuneration received by the assessee for anchoring TV shows cannot be brought within the service tax net under business auxiliary service or business support services.



3. Since by amendment of the Finance, Act, 1994, a new taxable service category of ‘Brand Promotion’ was introduced with effect from July 1st, 2010. Thus such category pf service was not taxable prior to July 1st, 2010. Such service rendered by the assessee  could not be taxed under the head of business auxilary service for the period to Jyly 1st, 2010.

4. Service tax demand raised on amount received for Playing Cricket in IPL under the head of ‘Business Support Service’, was 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. Hence, it could not 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. 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 could not be invoked and demand was hopelessly time-barred. - [2016] 71 taxmann.com 60 (Calcutta)

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