Tripti Alcobrew Private Limited Vs Commissioner of Central Excise Customs (CESTAT Delhi)
In a significant clarification on service tax liability for composite contracts, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Delhi, has ruled that a license fee paid for endorsing a brewery license does not constitute “renting of immovable property” and is therefore not subject to service tax. The tribunal’s decision, pronounced on June 6, 2025, sided with Tripti Alcobrew Private Limited, emphasizing that the transfer of the “right to use” a license falls under the ambit of a “deemed sale” of goods, separate from the rental of a physical premise.
The ruling came in an appeal filed by Tripti Alcobrew Private Limited against an order-in-original dated February 27, 2019, which had confirmed a service tax demand for the period June 2016 to June 2017. The demand was raised on the grounds that the appellant was providing services by endorsing its brewery license along with renting its land, building, plant, machinery, and premises, classifying these collectively under “renting of immovable property” services, as per Section 66E(a) of the Finance Act, 1994.
Background of the Dispute
The core of the dispute revolved around the nature of the financial consideration Tripti Alcobrew received from M/s. SKOL Breweries Ltd. (later Sab Miller). Tripti Alcobrew, holding a valid brewery license, had entered into a License Agreement with SKOL/Sab Miller. Under this agreement, Tripti Alcobrew endorsed its brewery license in favor of SKOL/Sab Miller, allowing them to brew and manufacture beer using the brewery facilities and the permitted capacity. In return, SKOL/Sab Miller was to pay Tripti Alcobrew a specified annual amount.
