Pranav B Prem

In a major relief to cricket legend Sachin Tendulkar, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai Bench, has held that match fees received by the cricketer for participating in Indian Premier League (IPL) matches are not taxable as Business Support Service (BSS) under the Finance Act, 1994. A Division Bench comprising S.K. Mohanty (Judicial Member) and M.M. Parthiban (Technical Member) observed that the issue was no longer res integra and had already been settled by multiple previous rulings involving other IPL players and franchises.

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The Bench relied on earlier decisions in cases such as Sourav Ganguly, Karn Sharma, Piyush Chawla, Yusuf Pathan, Anil Kumble, and Yuvraj Singh Bundhel, where similar service tax demands were quashed, consistently holding that remuneration received by players for participating in matches constitutes a non-taxable sporting activity and not a taxable business support service.

Background

The case arose from an audit observation that M/s Indiawin Sports Pvt. Ltd., a franchise under the BCCI–IPL consortium, had made payments to Sachin Tendulkar for the IPL seasons 2008–09 to 2011–12. The Department alleged that these payments amounted to consideration for taxable services under the category of Business Support Service (BSS) and that Tendulkar had failed to pay service tax on such income. Pursuant to the audit, a Show Cause Notice dated March 12, 2013 was issued, proposing recovery of ₹1.23 crore towards alleged unpaid service tax. The Department claimed that Tendulkar’s participation in endorsement events, wearing of team-branded apparel, and media appearances supported the business interests of the franchise, thus falling within the scope of BSS.

However, the Commissioner of Service Tax-IV, Mumbai, after detailed examination, dropped 90% of the proposed demand, holding that services rendered by a player in relation to participation in cricket matches cannot be treated as taxable under BSS. The Commissioner confirmed only ₹12.5 lakh, representing 10% of the contracted amount—a portion payable even if the player did not participate in any match—considering it as promotional in nature.

Department’s Appeal

The Revenue challenged the Commissioner’s order before the Tribunal, arguing that the entire amount paid to the cricketer should be taxable since all his activities, including brand visibility and promotional engagements, supported the commercial objectives of the franchise. It was contended that by wearing franchise-branded jerseys, attending team endorsement events, and fulfilling sponsorship obligations, the player indirectly promoted the franchise’s business, thereby rendering a taxable business support service.

Tendulkar, represented by Advocate Bharat Raichandani, opposed the appeal and filed a cross-objection, asserting that his agreement with the franchise was primarily for playing cricket—a sporting activity outside the ambit of service tax. Any promotional obligations were merely incidental to the primary purpose of playing.

Tribunal’s Findings

After hearing both sides, the Bench held that the issue had already been conclusively decided in previous cases involving other IPL players and franchisees. Referring to the Tribunal’s 2023 decision in Knight Riders Sports Pvt. Ltd. v. Principal Commissioner of Service Tax-IV, Mumbai, the Bench reiterated that player agreements are primarily for participation in cricket matches, and promotional activities, if any, are incidental. In the absence of any clear mechanism to segregate taxable promotional components from non-taxable sporting services, the entire consideration cannot be subjected to service tax.  “It is a settled principle of law that if no machinery provision exists to exclude non-taxable service (playing cricket) from a composite contract, the same is not taxable since law must provide a measure or value of the rate to be applied,” the Tribunal noted. The Bench observed that the adjudicating authority had rightly categorized only 10% of the contractual payment—retained even if the player did not play—as consideration for promotional activities. The remaining 90% related to sporting performance, which is non-taxable.

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Holding that there was no infirmity in the Commissioner’s order, the Tribunal dismissed the Department’s appeal and disposed of Tendulkar’s cross-objection.“We do not find any infirmity in the impugned order passed by the learned adjudicating authority. Therefore, the appeal filed by the Revenue is dismissed,” the Bench concluded. Accordingly, the service tax demand of ₹1.23 crore was quashed, and the relief granted to Sachin Tendulkar by the lower authority was upheld in full.

Appearance

Shri Dhananjay Dahiwale, Auth. Representative for the Appellant
Shri Bharat Raichandani, Advocate for the Respondent

Cause Title: Commissioner of Service Tax-IV, Mumbai Versus Sachin Tendulkar

Case No: Service Tax Cross Objection No. 91136 of 2016 In Service Tax Appeal No. 86880 of 2016

Coram: S.K. Mohanty (Judicial Member), M.M. Parthiban (Technical Member)