2014 (1) TMI 1788 - AT - Service Tax

Waiver of pre-deposit - promotional activities - Business auxiliary services or not - Held that - keeping in view the definition of Business Auxiliary Service and also keeping in view the findings made by the adjudicating authority himself that by undertaking promotional activity, the appellant is promoting his own product, we are of the view that the appellant has a good prima facie case in its favor - we dispense with the condition of pre-deposit of duty and penalty - petition allowed - decided in favor of petitioner.

Summary

Issues:
Prayer to dispense with pre-deposit of Service Tax and penalty confirmed against the applicant for Business Auxiliary Service.

Analysis:
The appellant, engaged in manufacturing Bulk Packaged Drinking Water under a franchise agreement with a company, was facing a demand for Service Tax on amounts received for promotional activities shared with the company. The dispute centered around whether the appellant was providing Business Auxiliary Service to the company and thus liable for Service Tax. The Commissioner had observed that the promotional activities were for the appellant's own business promotion, not exclusively for the company, and questioned the applicability of Business Auxiliary Service. Noting that the goods were manufactured by the appellant under the franchise agreement, the Tribunal found that the appellant was promoting their own product, not the company's, and thus had a prima facie case in their favor against the Service Tax demand.

The Tribunal distinguished a previous case involving concentrate/syrup provision by a brand name owner, emphasizing the appellant's status as an independent manufacturer of Bulk Packaged Drinking Water. This distinction led to the Tribunal's decision to dispense with the pre-deposit condition of duty and penalty, granting an unconditional stay petition in favor of the appellant. The judgment highlighted the importance of the nature of the promotional activities and the ownership of the goods in determining the applicability of Business Auxiliary Service and the corresponding Service Tax liability.