In Service Tax Appeal No. 41520 of 2013 -CESTAT- Vodafone Idea exempted from Service Tax for ICC Cricket World Cup and IPL sponsorship: CESTAT (Chennai)
Members P. Dinesha (Judicial) & Vasa Seshagiri Rao (Technical) [23-06-2023]

Read Order: Vodafone Idea Limited v. The Commissioner of Central Excise, Customs and Service Tax

Chahat Varma

New Delhi, June 26, 2023: The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal has provided a favourable verdict for Vodafone Idea Limited (appellant) by ruling that the appellant was not liable to pay any service tax for sponsoring the ICC Cricket World Cup and the Indian Premier League (IPL).

Briefly stated, the appellant, a subsidiary of M/s. Vodafone India Limited, was found to have incurred an expenditure on sponsorship services without paying the appropriate service tax. The Revenue authorities noticed this discrepancy during the scrutiny of the appellant's tax returns for the period from 01.05.2006 to 31.03.2010. As a result, a show cause notice was issued, leading to the imposition of service tax and penalties.

The two-member bench of P. Dinesha (Judicial) and Vasa Seshagiri Rao (Technical) noted that the primary issue to be resolved was whether sponsoring the IPL and ICC Cricket World Cup can be equated with sponsoring sports events or not. The bench acknowledged that this issue has already been settled in favor of the appellant, as previous tribunal decisions have consistently ruled that no service tax was payable on the sponsorship of IPL and ICC cricket tournaments during the impugned period.

The bench also cited the case of M/s. Hero Motorcorp Limited v. Commissioner of Service Tax, Delhi [LQ/CESTAT/2013/257], in which it was established that the expression 'in relation to' has a broad interpretation. In that case, it was determined that the sponsorship activities of the assessee were directly associated with sports events and therefore not subject to service tax.

The bench concluded that the levy of tax was not applicable due to the absence of any provision of service and the payments were made solely in relation to the sponsorship of the IPL Cricket tournament. As a result, the provisions made by the appellant in their books of account, in accordance with the Generally Accepted Accounting Principles (GAAP), for sharing the expenditure on sponsorship services were deemed not taxable.