Cricket Player Providing Brand Promotion Services Not Liable To Pay Service Tax: CESTAT

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has quashed the demand for service tax on remuneration received by the cricket player from M/s. Nike India Pvt. for brand promotion.

The bench of Ramesh Nair (judicial member) and C. L. Mahar (technical member) relied on the decision of the Calcutta High Court in the case of Sourav Ganguly vs. UOI & Others, in which it was held that the arrangement between the owner company and the cricket player is one of employment, and hence players are not directly involved in the brand promotion of a brand owner.

The appellant/assessee is a cricket player and engaged in paying for cricket in the Indian Premier League for a team owned by M/s. KPH Dreams Cricket Pvt. Limited, Chandigarh, Punjab (KPH) under the agreement between KPH and the appellant, Shri Ajitesh Kamlesh Argal.

The appellant received remuneration for playing cricket for KPH. He also received a small consideration from M/s. Nike India Pvt. Limited for displaying their brand logo for the promotion of their product.

As regard the remuneration received from KPH, the department contended that the appellant has provided the service of brand promotion, which falls under the category of business auxiliary service and is taxable under service tax. Similarly, as regards the remuneration received from M/s. Nike India Pvt. Limited for participation in promotional activities, the demand for service tax was raised.

The appellant submitted that as per the agreement for playing cricket on behalf of M/s. KPH Dreams Cricket Pvt. Limited (KPH), it is for the employment of the appellant with KPH, and the appellant receives remuneration for it. The appellant is not engaged in the brand promotion of any company. Therefore, the agreement for employment of the appellant with KPH shall not attract service tax.

The appellant contended that the demand on remuneration received from M/s. Nike India Pvt. Limited, after deduction of remuneration received from KPH, is much below the threshold limit of small scale exemption under Notification No. 06/2005-ST dated May 1, 2005. Therefore, the entire demand is not sustainable.

The Tribunal held that the appellant is indeed involved in direct brand promotion for the brand owner; however, the appellant has claimed that the value of such a service is well within the threshold limit provided under exemption notification 6/2005-ST dated May 1, 2005.

The court found that since the remuneration received by the appellant from KPH does not involve any service, the appellant shall be eligible for small-scale exemption provided under Notification No. 6/2005-ST dated May 1, 2005, up to the threshold limit of gross value in a financial year.

Case Title: Ajitesh Kamlesh Argal Versus Commissioner of Central Excise & ST, Vadodara-I

Case No.: Service Tax Appeal No. 11229 of 2013-DB

Date: 03.04.2023

Counsel For Appellant: Advocate Mrugesh Pandya

Counsel For Respondent: Rajesh K Agarwal

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