In a major relief for former Indian cricket team captain and current BCCI president Sourav Ganguly, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has set aside a service tax liability amounting to around Rs 1.51 crore for promotional activities as a brand ambassador for various corporate clients along with other services.
The case also pertains to rendering other services like TV anchoring, cricket playing fee, the fee for article writing.
Kolkata-bench of CESTAT gave a clean chit to Ganguly and observed that in case if the brand name or house mark is promoted by a celebrity, without reference to any specific product or services, the service would not be classified under business auxiliary services and hence not taxable under service tax law.
“There is, therefore, no manner of doubt that the activity carried out by the appellant would be classifiable under the new taxable service contemplated under section 65(105((zzzzq) of the Finance Act,” said the CESTAT order.
“As the appeal filed by the appellant is being allowed and the demand confirmed by the Commissioner is being set aside, there is no reason why the appellant should not be granted interest on the amount of (Rs 1,51,66,500 and 50,00,000) deposited with the Government from the date of deposit of the amount up to the date of transfer of the said amount to the Registrar General of the High Court,” it said.
The tribunal further directed that the former India captain shall also be entitled to interest on the amount of Rs 1.51 crore and Rs 50 lakh from the date of deposit of the amount with the government up to the date the amount was transferred to the Registrar General of the Calcutta High Court at the rate of ten percent per annum, within one month of the order.
The Directorate General of Central Excise Intelligence, Kolkata had initiated an investigation against the appellant — Ganguly — on November 5, 2009, and sought certain records.
Eventually, a show-cause notice dated September 26, 2011, was issued to Ganguly proposing to demand service tax on the amount received by the appellant during the period from May 1, 2006, to June 30, 2010, by invoking the extended period of limitation contemplated under the provision to section 73(1) of the Finance Act.
A reply that was filed by the appellant to the notice asserted that the appellant had not provided any service that could be classified either under BAS or BSS during the period May 1, 2006, to June 30, 2010.
In particular, it was stated that the appellant was a legend in the field of game of cricket and had a huge following of fans, mainly in view of his overall performance as an international player.
The appellant had, therefore, gathered a huge reputation not only as a cricket player “but also as a distinguished sports celebrity (celebrity-model) nationally and internationally commanding a huge ‘Brand Value’ in the world of commerce. The brand hereto is “Sourav Ganguly”, the reply said.