Matter remanded for de novo adjudication due to violation of natural justice

PJ/Case Laws/2012-13/1427

Case:- RAHUL DRAVID VERSUS COMMISSIONER OF SERVICE TAX, BANGALORE

Citation:- 2012(28) S.T.R. 593 (Tri. - Bang.)

Brief Facts:-The appellant as a player of cricket received fees from M/s. Royal Challengers Sports Pvt. Ltd. (“Royal Challengers” for short) for playing IPL (Indian Premier League) tournaments during the periods of dispute and that the impugned demands of service tax are on these fees. Royal Challengers were the franchisee of the Board of Control for Cricket in India (BCCI). Royal Challengers had also executed Memorandums of Understanding (MoU) with commercial establishments for display of the letter/logo/mark/sign on the MoUs, franchisee agreements and player contracts. The Department framed a case against the appellant for recovery of service tax, under the head “Business Auxiliary Services” (BAS), on the fee collected by him from Royal Challengers. The case by Department made out in the relevant show-cause notices is that the appellant was rendering BAS to Royal Challengers by sporting which, according to Department, were in the nature of advertising the products of the aforesaid companies. There were two notices relied upon certain documents, copies of which were supplied to the appellant. However, the MoUs, referred to in the show-cause notices were not so supplied. Nevertheless, the adjudicating authority considered these documents also while passing the impugned orders. Apart from this, the main grievance of the appellant is that none of his substantive contentions was considered by the adjudicating authority.

Appellant’s Contention:-The appellant has submitted that the learned commissioner has chosen to go by Wikipedia and other materials, without referring to the contentions of the assessee, to reach the conclusion that the assessee rendered BAS and was, therefore, liable to pay service tax. In his reply to the show-cause notices, the assessee took the stand that his activity in the tournament field did not attract service tax saying that cricket is not the game of chance like lottery etc. It was a game of skill and dexterity. The assessee, in his replies to the show-cause notices, also claimed the benefit of Section 80 of the Finance Act, 1944 while challenging the proposal for imposition of penalties under Sections 76 & 77 of the Act.

Respondent’s Contention:-The Additional Commissioner (AR) is the view that the appellant should be directed to make pre-deposit of at least 10% of the amount of service tax in view of the Stay Order No. 151/2012 dated 31-1-2012 passed by this Bench in Appeal No.304/2011 filed by Royal Challengers Sports (P) Ltd. against a demand of service tax under reverse charge mechanism in respect of similar fees paid to foreign cricketers.

Reasoning of Judgment:-The Tribunal heard both the parties and considered that on a perusal of the cited Stay Order, they have not found anything therein to indicate that any case akin to the one made out before them by the appellant had arisen for consideration in Royal Challengers case. Apparently, that was a case agitated by both sides on merits and this Bench, having found no strong prima faciecase for Royal Challengers, asked for pre-deposit to the extent of 10% of the service tax amount demanded. It is evident from the records of this case that the contentions raised by assessee in his replies to the show-cause notices were not heeded by the adjudicating authority which chose to rely on Wikipedia and other materials without referring to the contentions of the assessee. It appears, Wikipedia was elaborately referred to in the impugned order without putting the assessee on notice, which, by all means, amount to violation of natural justice. The case of the Department considered by the learned Commissioner was mainly based on the MoUs executed by Royal Challengers with the owners of logo/mark/sign which were displayed by the cricketer on his uniform during the course of the tournaments, but no copy of any such MoU was supplied to the assessee, nor even mentioned in the list of relied upon documents attached to the show-cause notices. This is yet another instance of denial of natural justice to the appellant. In these circumstances, Tribunal is of the considered view that these matters have to be remanded for de novo adjudication in accordance with law.

Tribunal further makes it clear that the assessee should be given the copies of the MoUs referred to in the show-cause notices. It goes without saying that, upon receipt of such documents, the assessee shall have liberty to file additional replies/written submission vis-à-vis the show-cause notices. Both the appeals and the stay petitions therein stand disposed of in the above terms.

Decision:- Appeals allowed by way of remand.

Comment:- The analogy drawn from this case is that there are instances when the appeal is allowed solely on the grounds of not considering the submissions of the appellant or not providing them necessary documents relied upon by the department.

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PJ/Case Laws/2012-13/1427

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