Case Law Details
United Spirits Limited Vs Commissioner of Central Taxes (CESTAT Bangalore)
CESTAT find that the adjudicating authority has confirmed the demand in respect of various fees paid to the State Government in respect of manufacture, import and sale of alcoholic liquor. The adjudicating authority, though dropped the demand on licence fee, but confirmed the demand on all other fees. In our considered view, there is no difference between the licence fee and other fees as these fees are not charged against any service provided by the State Government. These fees were charged as per the Statutory levy; therefore not against provision of any service. Since there is no service is existing against fee paid by the appellant to the State Government, service tax cannot be charged on the said fees.
FULL TEXT OF THE CESTAT BANGALORE ORDER
The issue involved in the present case is whether the appellant is liable to pay service tax on reverse charge basis on various fees paid by the appellant to the State Excise Department or to the Government or Government agencies during their business of manufacture, import and sale of alcoholic beverages for human consumption?
2. Shri Prasad Paranjape, learned counsel appearing for the appellant submits that the amount on which the service tax was demanded is towards the payment of various fees such as permit fee, import/export pass fee, excise escort charges, supervision charges, and other related charges, additional fees paid in relation to manufacture, import distribution and sale of liquor. He submits that the licence fee, permit fee, import pass fee and export pass fee are payable to the State Government for parting with its exclusive privilege to import, export and transport liquor, which is in terms of Entry 8 of List-II of Seventh Schedule of the Constitution of India; according to which, production manufacture, possession, transport, purchase and sale of intoxicating liquors is the ‘exclusive privilege’ of the State. He submits that there is no quid pro quo in the licence fee and service, if any, rendered by the State Government; the licence fee charged by the State Government is neither any tax nor any fee, but it is the consideration charged by the State Government for parting with its privilege and granting it to licensee for manufacture and sale liquor. He submits that the licence fee charged by the State Government is not subject to tax as the same is not for any service. Pursuant to the GST Council meeting minutes and consequential retrospective amendment vide Section 117 of the Finance Act, 2019, it became even more clear that service tax is not leviable or payable on the licence fee paid to the State Excise Department. He submits that even though the respondent had correctly dropped the service tax demand on licence fee, the respondent had erred in confirming the demand in respect of the permit fee, import pass fee, export pass fee and other fees/charges. He submits that the respondent has erred in holding that the permit granted for import/export of liquor cannot be treated as a licence. He submits that the respondent had erred in not appreciating that like the licensee fee, permit fee, import pass fee and export pass fee are also consideration charged by the State Government for parting with its exclusive privilege to import and export liquor. He submits that identical issue has been decided by this Tribunal in the case of Anheuser Busch Inbev India Ltd. Vs. CCT, Bengaluru North West [2021(52) GSTL 429 (Tri. Bang.)]; therefore the issue being squarely covered by the said judgement, it is no longer res integra. He also placed reliance on the following judgments:-
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