CESTAT Rules Service Tax Not Applicable on Club Services by Cricket Association; Allows Cenvat Credit on LED Scoreboard
Pranav B Prem
The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that service tax is not leviable on services rendered by cricket association clubs to their members. The bench, comprising Dr. D.M. Misra (Judicial Member) and R. Bhagya Devi (Technical Member), also upheld the eligibility of Cenvat Credit on the LED scoreboard used by the association.
The case arose from an appeal filed by the Karnataka State Cricket Association (KSCA), an association affiliated with the Board of Control for Cricket in India (BCCI), against the Order-in-Original passed by the Commissioner of Central Excise, Bangalore, which confirmed service tax demands along with interest and penalties under various heads. The KSCA, apart from promoting cricket, also operates a club house offering services to its members.
A show-cause notice was issued alleging that KSCA rendered taxable services such as “sale of space or time for advertisement,” “renting of immovable property,” and “club or association service” without paying appropriate service tax, and that it availed irregular Cenvat Credit on an LED scoreboard. On adjudication, the demands totaling over ₹2 crore were confirmed.
On appeal, KSCA argued that no service tax could be levied under the head “club or association service” in light of the Supreme Court’s landmark decision in State of West Bengal v. Calcutta Club Limited [2019(29) GSTL 545 (SC)], which ruled that services rendered by a club to its own members are not liable to service tax due to the principle of mutuality. The Tribunal agreed and set aside the demand under this head, noting that it had also ruled in KSCA’s favour in an earlier case on similar facts.
Regarding the service tax demand under “sale of space or time for advertisement,” KSCA contended that it had merely licensed out space to advertising agencies who in turn dealt with third parties, and therefore KSCA was not the service provider. The Tribunal, however, rejected this argument. Relying on the judgment in Vidarbha Cricket Association v. CCE [2014(1) TMI 204 – CESTAT Mumbai] and CCE v. Saurashtra Cricket Association [2020(33) GSTL 216 (Tri. Ahmd.)], which was later upheld by the Supreme Court, the Tribunal held that licensing of space for advertisements is squarely covered under the taxable category of “sale of space or time for advertisement.” However, the Tribunal noted that since the department had prior knowledge of similar transactions through an earlier show-cause notice and investigation, the extended period of limitation could not be invoked. Thus, the demand was limited to the normal period only.
As for the “renting of immovable property” service, the Tribunal observed that the liability arose only due to retrospective amendments introduced by the Finance Act, 2010. The appellant had argued, supported by various precedents including National Institute of Bank Management [2015(38) STR J280 (Bom.)], that when tax liability arises due to retrospective changes, the extended period cannot be invoked. The Tribunal accepted this argument and remanded the matter to the adjudicating authority for recomputation of liability strictly within the normal limitation period.
A significant issue in the case was the denial of Cenvat Credit on an LED scoreboard installed at the stadium. The department argued that since the scoreboard was used for cricketing activities and not directly linked to taxable services, credit was not admissible. However, KSCA contended that the scoreboard also facilitated Mandap Keeper services and advertising displays, thereby creating a nexus with output services. The Tribunal held in favour of KSCA, stating that the denial of Cenvat Credit was not sustainable as the scoreboard was indeed used in relation to taxable services. The Tribunal also noted that the value of the scoreboard was later removed from the gross block of depreciation, confirming that there was no double benefit of claiming both depreciation and Cenvat Credit.
In conclusion, the Tribunal modified the adjudication order by setting aside the confirmation of demand under “club or association service” and allowing Cenvat Credit on the LED scoreboard. The issues related to advertisement and renting services were remanded to the lower authority for fresh computation, restricted to the normal period of limitation. All penalties were quashed.
Appearance
Counsel for Appellant/ Assessee: G. Shivadass
Counsel for Respondent/ Department: Rajiv Kumar Agarwal, Commissioner (AR)
Cause Title: M/s. Karnataka State Cricket Association V. Commissioner of Service Tax, Bangalore North
Case No: Service Tax Appeal No. 25437 of 2013
Coram: Dr. D.M. Misra [Judicial Member], R. Bhagya Devi [Technical Member]
