The Bombay High Court has asked the Board of Control for Cricket in India (BCCI) to approach the Supreme Court to determine whether service tax can be levied for services rendered by the cricket board following agreements signed with MSM Satellite (Singapore) Pte Ltd and World Sport Group (India) Pvt Ltd in 2008 and 2009 in respect of telecast of Indian Premier League (IPL) matches being played on the Indian soil.
A division bench of Justices Girish Kulkarni and Jitendra Jain recently asked BCCI to approach the apex court observing: “In our view, the present appeals raise an issue on the taxability of the services in question, hence these appeals are not maintainable before this court. The remedy of the appellant (BCCI) would be to approach the Supreme Court by filing an appeal under Section 35 of the Central Excise Act, 1994.”
Division Bench's Observation
The HC was hearing an appeal filed by BCCI challenging a common order passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai, on December 10, 2008, rejecting its plea.
The tribunal, by a common order, had rejected four appeals filed by BCCI and confirmed the order of the Assessing Officer (AO).
AO's Tax Demand and Appeals to CESTAT
The AO had raised a demand for payment of service tax from the BCCI. The tax was sought to be levied on the agreements signed by BCCI awarding media rights to one MSM Satellite (Singapore) and World Sport Group (India) on January 21, 2008 and March 25, 2009
The AO issued show cause notices for the relevant periods being financial years 2007-08, 2008-09, 2010-11 and 2011-12, classifying the assessee as a ‘Franchisee’ within the meaning of Section 65 (47) of Chapter V of the Finance Act, 1994 in relation to services rendered by it to MSM Satellite (Singapore), which were in respect of telecast of IPL matches being played on the Indian soil.
Service Tax Commissioner's Argument
The high court noted that the record revealed that the issue before the tribunal was in regard to the taxability of the said services, as BCCI contended that the services, which were to be provided as per the agreements, were transactions of “export of service”, falling within the purview of Export of Services Rules, 2005. Hence, the service tax cannot be levied on the same.
The CESTAT did not agree with BCCI’s contentions that such services were not taxable. It held that the transaction was not a transaction of export of service.
The BCCI challenged the CESTAT’s order before the high court.
High Court's Decision and Supreme Court Jurisdiction
Advocates Jitendra Mishra and Satyaprakash Sharma, appearing for the Commissioner of Service Tax, questioned the maintainability of the plea contending that the issue raised in these appeals, is in regard to determination of taxability of the services for the purpose of assessment. Hence, as per the provisions of Section 35H and 35L of the Central Excise Act, 1944, as made applicable to the service tax, on the issue of determination of taxability, the appeals would lie before the Supreme Court.
The bench noted that the BCCI’s case is on the issue that services in question are not taxable as ‘Franchisee’, as the appellant is undertaking export of services. “Thus necessarily the issue is in relation to the determination of taxability. Such issue can be considered and adjudicated only by the Supreme Court, as per the mandate of the provisions of Section 35L of the 1994 Act,” the bench said.
Hence, the high court disposed of BCCI’s appeal, while keeping all the contentions “expressly open” and permitted them to approach the SC.
