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.
2. In this connection, we heard Ms. Dipika Gaurav, Ld. Advocate for the appellant and Shri Sanjay Jain, Ld. DR for the Revenue.
3. The Ld. Advocate submitted that an identical issue for the earlier period in respect of the very same appellant came up before the Tribunal in which Final Order No. 52413/2017 dated 22/03/2017 was passed by the Tribunal in which the demand for Service Tax was set aside. She further submitted that for the period subsequent to that covered in the present proceedings, the issue stands decided in favour of the appellant at the level of Commissioner (Appeals) vide his order dated 19/05/2017. On the above basis she prayed for setting aside the impugned order.
4. The Ld. DR justified the impugned order. He sought to distinguish the order passed by the Tribunal in respect of the appellant for the earlier He pointed out that in the earlier order the demand was dropped by the Tribunal for the reason that the definition of ‘Business Auxiliary Service’ was amended w.e.f. 01/07/2010. The Tribunal took the view that for the period prior to such amendment, the activities covered in the notice were not liable to Service Tax under BAS. He submitted that since the present period involved is subsequent to the date of such amendment i.e. after 01/07/2010, the demand merits to be upheld.
5. After hearing both sides and perusal of record, we note that the lower Authority has held the appellant as liable to payment of Service Tax under BAS, for the amounts received from brand owners such as M/s Coca Cola India Ltd. for marketing of their product. 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.
6. 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’.
7. In view of the above discussion, we find no justification for demand of Service Tax, which is set aside and appeal is allowed.
(Order pronounced in the open Court on__18/06/2018_)
