Promotional Activities Undertaken By Cricketers Are Not Covered Under Business Support Service: CESTAT Quashes Service Tax Demand Against Irfan Pathan and Yusuf Pathan

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has quashed the service tax demand against the international cricketers, Irfan Pathan and Yusuf Pathan.The two-member bench of Ramesh Nair (judicial member) and Raju (technical member) has observed that the apparel that the appellant had to wear was team clothing, which bears the brand names and marks of various sponsors. The appellants were not providing any service as independent individuals. It cannot be said that the appellants were rendering any services that could be classified as business support services.The appellants/assessees are international cricket players, and they had entered into a contract with the cricket team owners (known as franchisees). They were employed to play cricket for the respective teams in terms of the contracts for the IPL seasons. The fees paid to the appellants have been held to be subject to service tax under the service category of "business support services." The department noted that the appellant wears team clothing that bears the brands or marks of various sponsors and that they are also required to participate in promotional or public events of the franchisee, thus providing business support services.The appellant was served with show-cause notices for the service tax demand. After considering the reply, the adjudicating authority confirmed the service tax demand along with interest and imposed penalties on the appellant. An appeal was filed before the Commissioner (Appeals), who rejected the appeal of the appellant and upheld the order of the adjudicating authority.The appellants submitted that the agreement between the appellant and franchisee is an agreement of "employment." The agreement creates the relationship "employer–employee." Since the appellant was employed by the franchisee and the appellant agreed upon the remuneration and benefits of the agreement, wearing the franchisee’s colors and designs on cricket clothing, including marks and logos, is also part of the employment agreement and cannot be construed as promotional activities.The appellants urged that the appellant was in the employment of the respective teams and was not an independent service provider. It is a settled legal position that services provided by an employee for activities undertaken by the employer for and under the instruction of the employer cannot be termed "services provided by the employee."The department contended that there does not exist an employer-employee relationship as there is no contract of employment as the appellants are cricketers by profession. No proof of salary or remuneration payment is produced in Form 26AS or its tax deduction under the salary heading.The CESTAT has held that the "Indian Premier League Playing Contract" clearly demonstrates that it is the appellant who is recognized as a player first. The franchisee is clearly stated in the agreement to be recruiting players to work as professional cricketers for it. It is abundantly clear that a person who has earned the reputation and recognition of being a player is employed by the franchisee and not the other way around.The tribunal has noted that there is no doubt that the appellant has been appointed or engaged by the respective franchisee under the agreement of "employment." The agreement creates the "employer–employee" relationship.The tribunal set aside the demands for service tax against the appellants.Case Title: Yusufkhan M Pathan Versus C.C.E. & S.T.-Vadodara-iiCitation: Service Tax Appeal No.127 of 2012Date: 20.01.2023Counsel For Appellant: Advocate Saurabh DixitCounsel For Respondent: Assistant Commissioner Dinesh M. PrithianiClick Here To Read The Order

Promotional Activities Undertaken By Cricketers Are Not Covered Under Business Support Service: CESTAT Quashes Service Tax Demand Against Irfan Pathan and Yusuf Pathan

Mariya Paliwala

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