Case Law Details
Narmada Drinks Pvt. Ltd Vs C.C.E. & S.T. (CESTAT Delhi)
It is well known that the bottlers receive concentrate from the brand owners such as M/s Coca Cola, manufacture aerated products there from and sell the same. Para 6.2 of the relevant show cause notice alleges that the amounts have been received from the brand owners to promote and market the brand name of such brand owners. One of the activities for which BAS is leviable is for Promotion or Marketing or Sale of Goods Produced or Service provided. The appellant has received concentrate from the brand owners but is not marketing or selling the concentrate itself. The appellant’s contention is that they are manufacturing and selling the aerated water bearing the brand name and are not engaged in marketing or promotion of the said goods.
From the activities undertaken by the appellant, it is evident that they have not acted towards marketing and promotion or sale of goods produced by their client. At best it can be said that they have participated in promotion of the brand name of ‘Coca Cola’, ‘Pepsi’ etc. Such activities cannot be brought under ‘Promotion or Marketing or Sale of Goods Produced or Service Provided by the Client’, appearing under ‘Business Auxiliary Service’.
FULL TEXT OF THE CESTAT JUDGMENT
The appeal is directed against the Order-in-Original No. 20/2015 dated 31/03/2015. The appellant is a manufacturer of aerated waters. The Department noticed that soft drink manufacturers (owner of brand name) are paying certain amounts to the bottlers including the appellant in the name of ‘Support Price’. The said Support Price was paid towards services rendered by way of marketing and promotional activities. The appellant also received amounts from M/s Coca Cola Ltd. under the heads ‘Sales Target Incentive’. The Department took the view that these amounts were received by the appellants towards expenditure on advertisement and brand promotion of Coca Cola. Show cause notice was issued dated 07/04/2011 covering the period 2010-2012 for the amounts received by the appellant. The show cause notice sought to demand Service Tax on the amounts received under the category of ‘Business Auxiliary Service’ under Section 65 (105) (zzb) of the Act. After the due process of adjudication, the lower Authority confirmed the demand of Service Tax amounting to Rs. 54,84,950/- along with interest and penalties under various Section of the Finance Act.
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