Examine business activity in the light of legal definitions

FactsOur client is an Individual, sports person. He was selected to play in the IPL. However, after a few matches, the IPL team cancelled the contract. The department sought to tax the amounts received by our client under Business Support Services. The department also sought to tax the compensation received by our client on cancellation of the IPL contract, under business support services.
Our argumentWe took the following grounds of appeal, among other specific grounds –
1. Business Support Services are defined in section 65B of the Act as infrastructural, operational, administrative, logistic marketing or any other support of any kind comprising functions that entities carry out in ordinary course of operations themselves but may obtain as services by outsourcing from others for any reason whatsoever.
2. The services of a cricket player cannot be considered as an ‘Outsourced Service’ because it is not an activity an entity can carry out itself. The only activities that are capable of being outsourced are the activities that the entity is capable of carrying out itself. Consequently, the amounts received for playing cricket cannot be considered taxable under business support services.
3. The compensation received by the appellant was also not taxable under business support services for the same reasons.
4. In any case, if the services of playing cricket are not covered under Business Support Services, the turnover of services of the appellant falls below Rs.10 Lakhs which is the threshold limit under Service tax law. Hence, the question of taxing the compensation under any other head also does not arise.
ResultIn the result, the appellate authority accepted our contention that the services of a cricket player cannot be taxed under the head business support services and the adjudication order was set aside with full relief granted to our client.