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.

Transfer of shares under scheme of amalgamation wouldn’t come under pre-emption clause of Articles – An Analysis

The Bombay High Court has held in the matter of Shakti Insulated Wires (P) Ltd. v. Great View Properties (P) Ltd. [2016] 135 SCL 80/68 taxmann.com 169 that the transfer of shares under the Scheme of Amalgamation sanctioned by the Court is not a transfer of shares but is transmission by operation of law which would not come within the pre-emptive clause of the Articles of Association of the company. This article highlights the nuances in determining the pre-emption clause in the Articles of Association and clarifies the difference between transfer of shares under the Scheme of amalgamation and transfer of shares covered under the pre-emption clause of the Articles of Association of the Company.

AN ANALYSIS

1. Introduction

Section 58(2) of the Companies Act, 2013 provides that any contract or arrangement between two or more persons in respect of transfer of securities should be enforceable as a contract. This section has clarified the major issue of enforceability of pre-emption rights and options being exercised by the shareholders. This article highlights the nuances in determining the pre-emption clause in the Articles of Association and clarifies the difference between transfer of shares under the Scheme of amalgamation and transfer of shares covered under the pre-emption clause of the Articles of Association of the Company. The same has been explained by a landmark judgment dated 1^st March, 2016 of the Bombay High Court in the matter of Shakti Insulated Wires (P) Ltd (supra)