Custom, Excise & Service Tax Tribunal
M/S Hero Honda Motors Ltd vs Cst, Delhi on 10 April, 2013
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
West Block No.2, R. K. Puram, New Delhi.
Court No. 1
Date of hearing/decision: 10.04.2013
Honble Sh. Justice G. Raghuram, President
Honble Sh. Sahab Singh, Technical Member
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982.
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
Service Tax Appeal Nos. 355, 356 & 1418 of 2011
(Arising out order-in-Original No.67-68/RDN/2010 & No. 1-GB/2011 dated 10.12.2010 & dated 30.06.2011 passed by the Commissioner, Service Tax, New Delhi).
M/s Hero Honda Motors Ltd. Appellants
M/s Hero Motocorp Ltd.
Vs.
CST, Delhi Respondent
AND Service Tax Appeal Nos. 627, 628 & 629 of 2011 (Arising out Order-in-Original No. 05, 06 & 07/RDN/2011 dated 11.02.2011 & 28.02.2011 passed by the Commissioner of Service Tax, New Delhi).
M/s DLF Limited Appellants Vs. CST, Delhi Respondent
Appearance: Shri S. Ganesh, Sr. Advocate, Sh. B.L. Narasimhan, Sh. Dheeraj Srivastava and Ms. Kranti Somani, Advocates for the appellants.
Shri A. K. Jain, Jt. CDR for the Revenue.
Coram: Honble Mr. Justice G. Raghuram, President Honble Mr. Sahab Singh, Technical Member Final Order Nos.56056 56061/ 2013 Per: Justice G. Raghuram:
Heard Sh. S. Ganesh, Sr. Advocate and Sh. B.L. Narasimhan, Advocate for the petitioner/ appellant and Sh. Pramod Kumr, Jt. CDR and Sh. Govind Dixit, DR for the Revenue.
2. These appeals challenge distinct adjudication orders passed against the appellants/ assessees herein levying service tax in relation to sponsorship of IPL League matches, in IPL-1, IPL-2 and IPL-3 during the period 2008 to 2010. The issue falling for our appellate consideration is whether sponsorship of the IPL matches by appellants falls within the exclusionary clause of Section 65 (105) (zzzn) of the Finance Act, 1994 (hereinafter referred to as the Act).
3. The provision enjoins levy of service tax on services provided or to be provided to any body corporate or firm, by any person receiving sponsorship, in relation to sponsorship, in any manner, but excluding services in relation to sponsorship of sports events.
4. It is the admitted position by Revenue that appellants are sponsors of IPL League matches. Revenue contends before us, reiterating the conclusion recorded by the adjudicating authority that IPL League matches in relation to which the appellants had provided sponsorship does not constitute sponsorship of sports events since:
(a) a league match is not comprehended within the expression sports events;
(b) there is a commercial element involved in IPL matches; and (c ) IPL tournaments are in any event not sports events.
The adjudication order is predicated fundamentally on the aforesaid premises of Revenue which are reiterated before us.
5. Sponsorship as defined in Section 65 (99a) includes activities of the assessees (appellants herein). This is not in dispute.
6. It is required to summarise the reasons recorded by the adjudicating authority for its conclusion that the transactions in issue fall outside the exclusionary clause of Section 65 (105) (zzzn). According to the adjudicating authority, BCCI/ IPL is not per- se a sports event. It is a society registered under The Tamil Nadu Societies Act, 1975, with which the assessees have entered into an agreement termed Title Sponsor Agreement. The adjudicating authority refers to a Circular dated 26.07.2010 issued by the CBEC wherein the CBEC clarifies: it is felt that sponsorship of IPL is not sponsorship of any sport event, since IPL in itself is not a sports event but an entity of franchisee teams and therefore it is taxable. On the same analogy the sponsorship received by a player or a Team would be independent of sport event and hence taxable. The adjudicating authority further states that since departmental officers are bound to follow Instructions/ Circulars / Clarifications issued by the CBEC, sponsorship fee paid by the assessees to the BCCI / IPL cannot be considered to be sponsorship of any sports event, being clearly in the nature of obtaining sponsorship rights for being designated as the exclusive Title Sponsor of the League by the BCCI/ IPL, which is not a sports event but a society registered under The Tamil Nadu Societies Act, 1975.
7. We confess our inability to comprehend the contrived reasoning recorded by the adjudicating authority. It is not the assessees case that they were sponsoring BCCI / IPL. It is their contention as revealed from the show cause notices issued; the responses thereto; and the (illustrative) agreement dated 13.02.2008 (entered between the appellant in Appeal No. ST/627-629 of 2011 and the BCCI) that sponsorships are in relation to T-20 Cricket League matches to be held under the auspices of BCCI. The sponsorship agreement confers certain participative and associative rights to the assessees in relation to the IPL events, which assessees assume would contribute to augmentation of their business by way of advertisement of their presence in the fields of their core endeavour and business. Inasmuch as the analysis by the adjudicating authority proceeds on the assumption that BCCI / IPL is not a sports event but a society registered under The Tamil Nadu Legislation, and the sponsorship agreements between the assessee and BCCI / IPL are thus not sponsorship in relation to sports event, this premise constitutes a fundamental fallacy, fatal to the impugned orders, of the adjudicating authority.
8. The adjudication authoritys reasoning, that since what is sponsored by assessees are a series of league matches conducted by the BCCI/ IPL; these do not constitute sports event; and are therefore outside the purview of Section 65 (105)(zzzn), is also in our considered view fallacious.
9. The provision in issue excludes from liability to service tax, service in relation to sponsorship of sports event. In our considered view the exclusionary clause admits of no ambiguity, grammatical, syntactical or contextual. The legislature in its wisdom has considered it appropriate to extend the benefit of immunity to service tax, to the service of sponsorship in relation to sports events. The legislature has incorporated no restriction upon the exclusion by enacting that where a sports events has a commercial purpose, the exclusion is inapplicable. In the absence of ambiguity, the golden rule of construction namely a construction whereby the literal meaning corresponds to the legal meaning, must be adopted.
10. We find no justification for the adjudicating authoritys assumption that since there is an underlying commercial element in the IPL events, the sponsorship, which is otherwise in relation to a sports event, is not so. In the absence of any limiting words or phrases in the provision (excluding sponsorship of sports events having a commercial purpose from the benefit of immunity to service tax), the adjudicating authority cannot engraft its own policy choices and preferences to the legislatively conferred immunity.
11. The expression sport is not defined in the Act.
12. The Oxford Advanced Learners Dictionary of Current English, Sixth edition defines sport to mean inter alia, an activity that you do for pleasure and that needs physical effort or skill, usually done in a special area and according to fixed rules. The International Websters Comprehensive Dictionary of the English Language 2003 Edition also defines sport analogously as a particular game or play, especially games, such as baseball, football etc.
13. It is not the case of Revenue that cricket is not a sport. What is creatively recorded in the adjudication order and reiterated in oral argument before us is that since the assessees sponsorship is of a league match, it is not sponsorship of a sports event.
14. The adjudicating authority (though a different incumbent of the authority) passed an order which is the subject matter of Service Tax Appeal No. 1418 of 2011. The core reason recorded for disallowing the claim of the appellant herein is that while T-20 matches played under the banner of IPL are clearly sports events, BCCI/ IPL cannot be imagined to be a sporting event. The authority records that from the agreement dated 18.04.2008 (the relevant sponsorship agreement), the assessee was appointed the official partner as set out in clause 2 thereof and franchisee rights accrue to the assessee for a consideration (sponsorship fee) paid to the BCCI/ IPL; and the terms and conditions in the sponsorship agreement clearly disclose that the assessee had made the payment to the BCCI/ IPL, not for a T-20 tournament of any cricket match but to BCCI/ IPL, which itself is not a game.
15. The above analysis of the adjudication authority, creative as it goes, defies comprehension. On a true and fair analysis of the sponsorship agreement, that the sponsorship agreement is in relation to cricket tournaments conducted under the auspicious of BCCI/ IPL; that cricket is a sport; and the tournament (league) by the nature of its process is a sporting event, is indisputable. To dissect the generic composition of the sponsorship agreement by reference to a circumstance that payments are made not to the T-20 tournament of cricket matches but to the BCCI/ IPL (which is not a game), is an extravagant and logically misconceived analysis. Surely, it is not anybodys case that the payments were made to BCCI/ IPL for the latters intrinsic brand image and not for or in relation to the tournament (T-20, which is the subject matter of the sponsorship agreement). The charging provision clearly excludes from chargeability to service tax, sponsorship in relation to sports events. The expression in relation to connotes activities associated with sports events.
16. On the analysis above we conclude that the several adjudication orders, impugned in these appeals are predicated on a raft of fundamental fallacies:
(a) that sponsorship of a sports event, which has a commercial element (the IPL events) is disentitled to the benefits of immunity to service tax, notwithstanding the clear phraseology of section 105(65)(zzzn) of the Act; and
(b) since the sponsorship is in relation to league matches conducted under the auspicious of BCCI/ IPL and payments were made to the BCCI/ IPL, the sponsorship is not in relation to sports events, but is sponsorship of BCCI / IPL.
17. Both fundamental premises of the adjudication authority are misconceived and unsustainable. The impugned adjudication orders are therefore quashed.
18. These appeals are allowed but in the circumstances without costs.
(Justice G. Raghuram) President (Sahab Singh) Technical Member Pant 1