Indirect Tax- Case Law Update- December 2022

By CA Rajiv Luthia

1) 2022-TIOL-1028-CESTAT-AHM

CASE: COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAJKOT Versus SAURASHTRA CRICKET ASSOCIATION

Background and Facts of the Case:

  • The appellants, i.e. M/s. Saurashtra Cricket Association, Rajkot, are engaged in conducting Cricket Matches of International level, National Level and State level at different places in Rajkot Region.
  • The respondent is an Association registered under the Society Registration Act, 1860 and had conducted the different Inter District Tournaments matches and BCCI Tournaments Matches during the period from April, 2008 to January, 2009 at various places of Saurashtra-Kutch & Diu as per the direction given by the BCCI.
  • It was noticed that the respondent was conducting Cricket Matches as per the direction of BCCI and for that purpose the BCCI are transferring/ paying various type of amounts under the cover of subsidies / subvention from the amount of profit which was earned by the by way of conducting matches. It is the contention of the department that the respondent were treated as Sponsor/organizer because they are not organizing the event themselves, but for the same, BCCI has appointed/ authorized the respondent to conduct and manage such events.
  • The adjudicating authority after considering the submission of the respondent dropped the demand, proposed in the SCN Being aggrieved by the said Order-In-original, revenue filed the present appeal.

Arguments put forth:

The Appellants submitted as under:

  1. The learned Joint Commissioner (Authorized Representative) appearing on behalf of the revenue reiterates the finding of the impugned order.

 The Respondents submitted as under:

  1. The Learned CA appearing on behalf of the respondent submitted the details of support from BCCI whereby he has submitted that the respondent have received subsidy only and not service charges for Event Management Service and respondent have not provided any service to BCCI against the subsidy. He submits that the issue is no longer res integra.

  2. The same has been decided in various judgments as follows:-
    • – C.K . GANGADHARAN-2008 (228) ELT 497 (s.C.) = 2008-TIOL-140-SC-IT-LB
    • – PRIYANKA REFINERIES LTD.-2010 (249) ELT 70 (Tri. Bang.) = 2009-TIOL-2576-CESTAT-BANG
    • – SURCOAT PAINTS (P) LTD-2008 (232) ELT 4 (S.C.) = 2008-TIOL-223-SC-CX
    • – BOARD OF CONTROL FOR CRICKET IN INDIA-2007 (7) STR 384 (Tri. Mumbai) =2007-TIOL-684-CESTAT-MUM
    • – VIDARBH CRICKET ASSOCIATION-2015 (38) STR 99 (Tri.,-Mimbai)= 2013-TIOL-1404-CESTAT-MUM

Decision:

  • In the present case the show cause notice was raised by the revenue on the amount receive by the respondent from the BCCI as subsidy. The department has construed the said receipt as service charges received from BCCI against the services of event management. From the facts, it is clear that the respondent have received the subsidy against the expenses incurred for conducting Cricket Matches, therefore, by no stretch of imagination it can be said that the respondent has provided any taxable service to BCCI. This issue has already been considered by this tribunal in the case of VIDARBH CRICKET ASSOCIATION (Supra) wherein the Tribunal has passed the order in favour of the respondents.
  • The following subsidies have been given by BCCI – 1) TV Rights subsidy; 2) BCCI tournament receipts; 3) Infrastructure subsidy; 4) BCCI IPL subsidy; 5) Players expenses reimbursements; 6) lease fees for Corporate Box; and 7) subsidy granted by BCCI. The nature of these subsidies needs examination.
  • The object of grant of subsidy as evident from BCCI’s resolution is –

(a) to promote the game of cricket in India; 

(b) to arrange, organize, control and finance the visits of Indian Cricket Team to other countries and visits of Cricket Teams of other countries to India;

(c) to build, construct, maintain and repair various stadia and other amenities;

(d) to help junior cricketers, needy cricketers, retiring cricketers, players, umpires and other persons connected with the game of cricket;

(e) creation of infrastructure.

  • The question is whether these activities constitute Business Support services as defined in the law. From the definition of “Business Support Services”, it is evident that the support services should be provided in relation to business or commerce. The question is whether conducting cricket tournaments and telecasting the same would constitute business or commerce.
  • The Hon’ble Apex Court in the case of Secretary, Ministry of Information and Broadcasting v. Cricket Association of Bengal (supra) held that it clearly comes out that sports organizations are not business or commercial organizations, conduct of sports or sporting events and their broadcasting/telecasting is not assertion of commercial rights.
  • The ratio of the above judgment applies squarely to the facts of the case before the judges. It thus clearly emerges that, the service, if at all any, rendered by the appellant is not in relation to any business or commerce and therefore, there is no service tax liability on the said activity under Section 65(104c) read with 65(105)(zzzq) of the Finance Act, 1994.
  • In view of the above decision of this Tribunal, it is settled that in the case of the Cricket Association, similarly, placed as the appellant the subsidy received from BCCI was held to be non-taxable. Following the decision in the above case, It was held that the demand in the present case was rightly dropped by the adjudicating authority, Hence, the same is upheld, the Revenue’s appeal was dismissed.

 

2) 2022-TIOL-1029-CESTAT-AHM

CASE: FALCON PUMPS PVT LTD Versus COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAJKOT

Background and Facts of the Case:

  • The appellants have made pre-deposit in terms of Section 35F ibid for admission of the appeal by the Commissioner (Appeals) – The Commissioner (Appeals) also admitted the appeal on payment of 7.5% though the same was paid by way of reversal in the GST-ITC account.
  • This clearly shows that the Commissioner (Appeals) has accepted the 7.5% reversal in GST-ITC as pre-deposit in terms of Section 35F. Despite the clear finding, the Commissioner (Appeals) upheld the order-in-original and rejected the appeal for refund of predeposit, which is contrary to own findings, Since the Commissioner (Appeals) agreed that the appellant is eligible to avail the credit in their electronic credit ledger and the appeal for refund of predeposit should not have been rejected. The refund of predeposit should have been allowed if not in cash, but atleast by way of credit in their electronic credit ledger.
  • The issue in the present case is that whether the appellant is entitled for refund of pre-deposit made under Section 35F by way of reversal in GST-ITC credit.

Arguments put forth:

The Appellants submitted as under:

  1. The learned Advocate appearing for the appellant submitted that there is no dispute that pre-deposit of 7.5% was made for filing of appeal before Commissioner (Appeals) and on succeeding the appeal, the appellant is entitled for the refund of predeposit in terms of Section 35F of Central Excise Act, 1944. Merely because the 7.5% was paid by way of reversal in the GST-ITC account, refund of predeposit cannot be rejected. He placed reliance on the following judgements:

– Dell International Services India P. Ltd. 2019 (365) ELT 713 (Tri. Bang.)
– OIO No. 03/REF/2022-23 dated 10.05.2022 (Balson Polyplast Pvt. Ltd.)

The Respondents submitted as under:

  1. The learned AR appearing on behalf of the Revenue reiterates the findings of the impugned order. He submitted that the learned Commissioner (Appeals) has allowed the credit of this pre-deposit amount in their electronic credit ledger, therefore, the appellant should not have any grievance. He also placed reliance on the decision of the Division Bench of Allahabad Tribunal, order dated 23.08.2022, whereby it was held that pre-deposit cannot be made by way of debit in ITC.

Decision:

  • It was held that there is no dispute that the appellant has made pre-deposit in terms of Section 35F for admission of the appeal by the Commissioner (Appeals). The learned Commissioner (Appeals) also admitted the appeal on payment of 7.5% though the same was reversed in the GST-ITC account. This clearly shows that the Commissioner (Appeals) has accepted the 7.5% reversal in GST-ITC as pre-deposit in terms of Section 35F.
  • Despite the above clear finding, the Commissioner (Appeals) has upheld the order-in-original and rejected the appeal for refund of pre deposit which is contrary to his findings. Since the Commissioner (Appeals) has agreed that the appellant is eligible to avail the credit in their electronic credit ledger the appeal for refund of predeposit should not have been rejected, whereas the refund should have been allowed if not in cash, but atleast by way of credit in their electronic credit ledger. This is an apparent error in the order of the Commissioner which needs to be rectified. Accordingly, impugned order is set aside and the matter was remanded to the Commissioner (Appeals) to give a clear order considering his own finding that the appellant is eligible to avail the credit in their electronic credit ledger.