Calcutta High Court: Holding that the show cause notice dated 26th September 2011, demanding service tax from the Petitioner, was barred by limitation, the Court constituted by Justice Arijit Banerjee quashed it, as well as the Circular of the Central Board for Custom and Excise dated 26th July, 2010 which sought to tax the composite amount of fees paid to IPL players for cricketing and promotional activities, if indistinguishable. The amount of Rs. 1, 51,66,500/- was sought as service tax from Mr Sourav Ganguly, upon amounts received for writing articles in magazines, anchoring TV shows, brand endorsements under ‘business auxiliary services’ [Section 65(19) of the Finance Act, 1994] and IPL fees from KKR as ‘business support service’ under Section 65(105) (zzzq). The Court ordered a refund of the Rs. 1, 51, 66,500/- and Rs. 50 lakhs deposited by the Petitioner.
The Court rejected as ipse dixit grounds of suppression of facts used to extend limitation for demand of service tax, from 1 year to 5 as per Section 73, Finance Act. The Court referred the decision in Simplex Infrastructures Ltd. v. Commissioner of Service Tax, Kolkata 2016 SCC OnLine Cal 571 wherein it was said that question of limitation is a question of jurisdiction and Commission not to have authority to issue notice after a period of limitation. In this connection, the Court held that it cannot be said that the writ petition is not maintainable at all and should not be entertained for adjudication and once a writ petition is admitted, affidavits are invited from respondents and the matter comes up for final hearing before the Court, it would be unjust and unfair to dismiss the writ petition only on the ground of availability of an alternative remedy. and Commissioner of Central Excise v. Chennai Petroleum Corporation Ltd. 2007 (211) ELT 193 .
Though limitation barred its issue, the notice was quashed on other grounds. The Court noted that the definition of ‘business support services’ was exhaustive and indicated activities promoting business or commercial objectives, inapplicable to the Petitioner’s writing articles or anchoring TV shows. Further, brand promotion/endorsement was taxable under Section 65(105)(zzzzq) from 1st July 2010, after which the Petitioner had paid service tax as Celebrity Brand Ambassador. ‘Brand endorsement’ constituted a different category from ‘business auxiliary service’, as it was settled law that a levy introduced by amendment to the law did not exist prior to the enactment; hence tax from 1 May 2006 to 30th June 2010 upon endorsements as ‘business auxiliary services’ was not recoverable. The Court approved Commissioner of Service Tax, Delhi v. Shriya Saran 2014 (36) STR 641 where it was held activities prior to 1 July 2010 could not be taxable and Indian National Shipowners’ Association v. Union of India 2009 (14) STR 289.
The Court drew a parallel with the Order in Appeal No. 330-332/SVS/RTK/2014, dated 6 June 2014, where the Appellant, of Chennai Super Kings, was held to be in the employ of IPL and not an independent worker providing taxable service, as he was constrained by the franchisee.
The Court remonstrated with the Central Board of Excise and Custom not to seek to ‘legislate by issuing circulars/instructions’, citing Commissioner of Central Excise, Bolpur v. Ratan Melting & Wire Industries 2008 (12) STR 416 (an instruction/circular issued by a Ministry could not expand the scope of law, nor create tax liability). It would be de hors the statute to levy tax on composite amount of the fees for match playing and participation in promotional activities. [Sourav Ganguly v. Union of India., 2016 SCC OnLine Cal 3234 decided on 30-06-2016]