BCCI Subsidies To Cricket Associations Not Taxable As Service Consideration: Kolkata CESTAT

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 12 March held that subsidies received by cricket associations from Board of Control for Cricket in India (BCCI) are not liable to service tax, as they are in the nature of grants-in-aid and not consideration for any taxable service.

A Bench comprising Judicial Member Ashok Jindal and Technical Member K. Anpazhakan observed that there was no quid pro quo between the parties and that the amounts were provided to promote the game of cricket.

The Tribunal noted:

"the subsidies received by them are grants/ subventions made by BCCI to its member associations pursuant to BCCI's own constitutional and charitable obligations. The said grants or subsidies were not paid as quid pro quo for any identified taxable service rendered by the Appellant to BCCI........... there is no service tax liability on the grants received by the appellant from BCCI."

The case arose from demands raised against The Cricket Association of Bengal (appellant) for the period April 2010 to March 2015 under various heads, including event management, renting of immovable property, business support services and liability under the reverse charge mechanism.

The appellant's activities are primarily funded through grants and subsidies received from BCCI by virtue of its membership. According to the appellant, these amounts are not consideration for any taxable service but are intended to support the substantial expenditure incurred in organising cricket matches and maintaining cricketing infrastructure. On this basis, the appellant did not pay service tax on the grants received from BCCI and other amounts received in connection with the promotion of cricket-related activities.

The Department alleged that several receipts, including BCCI subsidies, advertisement income and stadium-related charges, were liable to service tax. The appellant, however, contended that the amounts received from BCCI were grants and not consideration for services, and that the principle of mutuality applied since BCCI and its members function as a common pool.

Accepting these submissions, the Tribunal held that all activities carried out during cricket matches, including advertisement, stall licensing and other commercial arrangements, were naturally bundled with the promotion of sporting events. Such bundled services, the Tribunal noted, are exempt from service tax under the applicable notifications. It further held that the Department's attempt to classify the activities under different taxable heads was not sustainable in law and observed that when the principal activity itself is exempt, ancillary activities cannot be taxed separately.

The Bench stated that "the entire amount received by the appellant was from BCCI, which are the subsidies received 'in the nature of grants-in-aid for promotion of cricket' and 'not for providing any service to BCCI' and therefore not liable to service tax. We find that the other amounts received by the appellant was also in connection with promotion of cricket related activities and hence not liable to service tax. Thus, the demand of service tax from the appellant is legally not sustainable."

On limitation, the Tribunal held that the extended period could not be invoked since the demand was based on records already disclosed by the assessee.

Accordingly, the Tribunal set aside the entire demand and allowed the appeal filed by The Cricket Association of Bengal, while dismissing the Revenue's appeal.

For Appellant: Deepak Suneja, Chartered Accountant

For Respondent: Prasenjit Das, Authorized Representative