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BCCI bowls out service tax authorities

BCCI is not liable to pay service tax under advertising services, report Sunil Shivdasani and Manish Pachouly.

business Updated: May 19, 2007 21:13 IST

The Board of Control for Cricket in India (BCCI) might have been in controversy following the debacle of Indian team in the world cup, but it came victorious against the service tax department in a case involving tax of Rs 11.19 crore.

The Customs, Central Excise, Service Tax Appellate Tribunal last week held that BCCI is not liable to pay service tax under advertising services.

SJ Singh, Commissioner, Service Tax, Mumbai, confirmed the order.

The tribunal was hearing two separate petitions filed by the BCCI and the department, both of which were later clubbed.

The controversy began in 2004 when the department, which was then under central excise, had levied the tax for revenue earned from advertisements and sponsorships from various companies for the test matches during the period.

The department had then treated BCCI as advertising agency as it received advertisements on the cricket grounds during cricket matches. The department issued show-cause notice to the BCCI asking it to pay the tax (Rs 11.19 crore) dues.

Following this, BCCI approached the Commissioner (Appeal) against the levy of tax but lost the case. It subsequently filed an appeal before the tribunal which then stayed the order but asked the board to pay Rs three crore as interim payment.

Subsequently in 2005 end, when the service tax department was separated from central excise, (the then) commissioner SJ Singh took a different view in a similar matter involving tax issue for the subsequent years. Officers in the department said that Singh had then taken the view what the tribunal held now. "He had dropped the tax for subsequent years stating that BCCI doesn't fall under the advertising agency category," said an officer requesting anonymity, as he is not authorised to speak to the media.

However, the higher ups in the department were not convinced with Singh's decision and filed an appeal in the tribunal. Since the nature of the two cases was same, they were clubbed.

Another officer in the department said that BCCI actually came under the space selling agency category but at that time it (space selling) did not figure under the service tax rules.

Meanwhile, BCCI would also get back Rs three crore that it had paid as interim payment following the direction of the tribunal.