CESTAT Kolkata Rules BCCI Grants to Cricket Bodies Not Taxable, Finds No Quid Pro Quo for Service Tax

CESTAT Kolkata Rules BCCI Grants to Cricket Bodies Not Taxable, Finds No Quid Pro Quo for Service Tax

Introduction

The Customs Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata Bench, has held that subsidies received by cricket associations from the Board of Control for Cricket in India (BCCI) are not liable to service tax, as they constitute grants-in-aid and not consideration for any taxable service. A Bench comprising Judicial Member Ashok Jindal and Technical Member K. Anpazhakan observed that the payments lacked any element of quid pro quo and were made to promote the game of cricket.

Factual Background

The dispute arose in relation to service tax demands raised against Cricket Association of Bengal for the period from April 2010 to March 2015. The association, a member of the BCCI, received financial support in the form of subsidies and grants to facilitate cricketing activities, including organizing matches and maintaining infrastructure. The appellant contended that such receipts were not consideration for services rendered but were grants provided as part of BCCI’s mandate to promote cricket.

Procedural Background

The tax department raised demands under various heads including event management services, renting of immovable property, business support services, and reverse charge liability.

The adjudicating authority treated BCCI subsidies, along with other receipts such as advertisement income and stadium-related charges, as taxable consideration. Aggrieved by the demand, the Cricket Association of Bengal filed an appeal before the CESTAT, Kolkata.

Issues

1. Whether subsidies received from BCCI constitute consideration for taxable services under service tax law.

2. Whether cricket-related activities, including ancillary commercial arrangements, are liable to service tax.

3. Whether the extended period of limitation could be invoked in the present case.

Contentions of the Parties

The appellant argued that the amounts received from BCCI were in the nature of grants-in-aid and not consideration for any service. It further contended that the principle of mutuality applied, as BCCI and its member associations functioned as a common pool for promotion of cricket.

The department contended that various receipts, including subsidies, advertisement revenues, and stadium-related income, were liable to service tax under different taxable categories.

Reasoning and Analysis

The Tribunal held that the subsidies received from BCCI were not linked to any specific service rendered by the appellant and therefore lacked the essential element of consideration required for levy of service tax. It observed that the grants were provided pursuant to BCCI’s constitutional and charitable objectives of promoting cricket and were not in exchange for any identifiable service.

The Bench further held that activities such as advertisement, licensing of stalls, and other commercial arrangements during cricket matches were naturally bundled with the primary activity of promoting sports. Since the principal activity was exempt, ancillary activities could not be taxed separately. The Tribunal also rejected the department’s attempt to artificially classify the activities under different taxable heads, holding such classification to be unsustainable in law. On limitation, the Tribunal found that the extended period could not be invoked, as the relevant records had already been disclosed by the assessee and there was no suppression of facts.

Decision

The CESTAT Kolkata set aside the entire service tax demand against the Cricket Association of Bengal and allowed the appeal. The Tribunal also dismissed the Revenue’s appeal, holding that subsidies received from BCCI and related receipts were not liable to service tax.

In this case the appellant was represented by Mr. Deepak Suneja, Chartered Accountant. Meanwhile the respondent was represented by Mr. Prasenjit Das, Authorized Representative.