Sales Promotion Services to Foreign Principal Are Not Intermediary Services: CESTAT Mumbai

The appeal challenged the order dated 20.09.2019 passed by the Commissioner, Central Tax and Central Excise, Navi Mumbai, confirming a service tax demand of ₹6,37,70,061, together with interest and an equivalent penalty. The appellant was engaged in providing sales promotion and other sales support services to its associated company, M/s Chevron Philips Chemicals Global FZE (CPC Global) located outside India. The services were classified as Business Auxiliary Service under the Finance Act, 1994. Since the entire output services were provided to the overseas entity, the appellant claimed refund of accumulated unutilized CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No. 27/2012-CE (NT) dated 18.06.2012.

Read SC Judgment in this case: Sales Promotion Services Are Not Intermediary Services: SC Upholds CESTAT Ruling

The jurisdictional Commissioner issued a show cause notice alleging that the appellant had acted as an agent of CPC Global and was therefore an intermediary, resulting in denial of refund and a demand of service tax amounting to ₹6,37,70,061. The adjudicating authority confirmed the demand through the impugned order, prompting the present appeal before the Tribunal.

The appellant submitted that its relationship with the overseas entity was that of an independent contractor and not of a principal-agent or broker-principal. It contended that it could not be regarded as an intermediary and that the issue had already been decided in its favour by the Tribunal in Final Order No. A/87373-87378/2019 dated 20.12.2019 in its own case. It therefore argued that neither rejection of refund nor confirmation of the service tax demand could be sustained. The Revenue supported the findings recorded in the impugned order.