The Chandigarh Customs, Excise and Service Tax Appellate Tribunal (CESTAT) clarified that the service tax in the case of Sponsorship Service is to be paid by the recipient of the service in terms of Notification No.16/2006-ST dated July 25, 2006. As the appellants did not render any Business Auxiliary Service, no service tax liability can be attached to it.
The Division Bench comprising S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) observed that the Revenue Department has not shown any evidence to the effect that the appellants have rendered any service to M/s Procam International, from whom they received the tournament subsidy, and no contract was placed on record to such effect.
The Bench referred to the only argument raised by the Department that Procam International is paying the respective District Cricket Associations as the sponsorship fee on behalf of Parle G and Boost, to found that the appellants have no agreement either with Procam International or with Parle G and Boost; and they have just transferred the amount, received from Procam International on behalf of Parle G and Boost, to the District Cricket Associations towards the sponsoring of inter-school tournament.
The Bench further noted that the appellants are not promoting the business of Procam International, which is making payments on behalf of Parle G and Boost; nor is the name of Procam International advertised anywhere, at least by the appellants.
Thus, the Bench concluded that when the appellants are not rendering any Business Auxiliary Service to Procam International, they cannot be called upon to pay service tax for simply acting as an agent for the transfer of the sponsorship fee to the district cricket association.
Briefly, an audit was conducted on the appellants, who are registered for providing Health & Fitness Centre, Club & Association Service, and Event Management Services, was revealed that they had received an amount of Rs. 12.49 lacs as tournament subsidy, but did not discharge the applicable service tax.
On enquiry, the appellants submitted that the amount was received for the Inter-School Tournament conducted by the District Cricket Association and the same was transferred to the district association. Later, a show-cause notice was issued, and the same was confirmed for the levy of service tax on the tournament subsidy.
Appearances:
Advocate Sudeep Singh Bhangoo, for the Appellant/ Taxpayer
Advocate Kanish Saini, for the Respondent/ Revenue
