The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that Nokia is not liable to pay service tax on sponsoring teams participating in IPL T-20 Cricket Tournament.
The bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that the sponsorship agreement was within the exclusionary clause, which excludes sponsorship services in relation to sports events under the provisions of section 65 (105)(zzzn) of the Finance Act, 2006.
Background
The respondent/assessee, Nokia India Pvt Ltd is registered with the Service Tax Commissionerate, Delhi for the taxable services namely, Sponsorship Service, Business Support Services, Development and Supply of Content Services, Information Technology and Software Services, Consulting Engineer, Manpower Recruitment Agency, Online Information and Data access and retrieval Services, Commercial Training & Coaching, Business Auxiliary Services.
Information was received that the respondent had entered into an agreement with M/s. Knight Riders Sports Pvt Ltd towards receiving the sponsorship rights of the Kolkata Knight Riders team, one of the eight teams participating in the DLF- IPL T-20 Cricket Tournament.
Kolkata Knight Riders had been granted franchisee rights by the Board of Control of Cricket in India (BCCI) for forming the cricket team to represent the State of Bengal in the T-20 tournament.
The respondent/department had paid Rs.15 crores to Kolkata Knight Riders for receiving the sponsorship rights of the said team. The Department was of the view that the said amount was taxable under the category ‘sponsorship services’.
The adjudicating authority considered the issue whether the noticee is liable to pay service tax under the category of sponsorship services for sponsoring a team participating in the IPL T-20 Cricket Tournament and whether the IPL T-20 Cricket Tournament can be termed as “sports event” in terms of the definition of taxable service, i.e. sponsorship services under section 65 (105) (zzzn) of the Finance Act, 1994.
After referring to the various provisions of the Act and the service tax rules, the adjudicating authority noticed that the issue of levy of Service Tax Rules on sponsorship services has been considered by this Tribunal in the case of M/s. Hero Motocorp Limited. vs. Commissioner of Service Tax.
In the case of M/s. Hero Motocorp Limited. vs. Commissioner of Service Tax it was held that since the sponsorship agreement, in our considered view, falls within the exclusionary clause i.e. the clause which excludes sponsorship services in relation to sports events, the appellant is clearly immune to the charge of service tax. The demand is also devoid of any merit and is hence liable to be set aside.
Conclusion
The tribunal dismissed the department’s appeal and upheld the order passed by the adjudicating authority.
Case Details
Case Title: Commissioner of Service Tax, New Delhi Versus M/s. Nokia India Pvt. Ltd.
Case No.: Service Tax Appeal No. 53427 of 2014
Date: 08.11.2024
Counsel For Appellant: Rajeev Kapoor
Counsel For Respondent: Deepak Thacker
