2011 (7) TMI 570 - AT - Service Tax

Promotion of brand name - service tax demand - Impugned period July 2003 to February 2007 - Held that - Allegation against the applicants is promotion of brand name and not the promotion of branded goods therefore the said activity has come into taxable net w.e.f 01.07.2010 and the same has been considered in the case of Jetlite (India) Ltd. vs. Commissioner of Central Excise New Delhi (2010 (12) TMI 40 - CESTAT NEW DELHI) wherein held that promoting the brand name does not fall under the category of Business Auxiliary Services - Therefore the appellant have made out a strong prima facie case for complete waiver of pre-deposit of Service Tax interest and penalty - Accordingly the same is waived and recovery thereof is stayed during pendency of the appeal.

Summary

Issues:
1. Whether the demand raised for payment of service tax against the appellant is sustainable under the category of "Business Auxiliary Services" for the period before July 2010.
2. Whether the activity of promoting brand name falls under the definition of "Business Auxiliary Services" as per the Finance Act, 1994.

Analysis:
Issue 1: The appellant, M/s Zenith Computers Ltd., contested the demand raised for service tax payment of Rs.67,80,664/-, interest, and penalties under the Finance Act, 1994, for the period July 2003 to February 2007. The appellant argued that the activity of promoting brand name was not taxable before July 2010. The Tribunal referred to the case of Jetlite (India) Ltd. vs. Commissioner of Central Excise, New Delhi, where it was held that promoting the brand name does not fall under "Business Auxiliary Services." Consequently, the Tribunal waived the pre-deposit of service tax, interest, and penalties.

Issue 2: The Revenue contended that the activity undertaken by the appellant was promotion of branded goods falling under the definition of "Business Auxiliary Services." However, upon examining the show-cause notice, the Tribunal noted that the allegation was specifically related to the promotion of brand names, not branded goods. Referring to the definition under section 65(105)(zzb) of the Finance Act, 2003, the Tribunal found that promoting brand names did not constitute "Business Auxiliary Services." Citing the Jetlite (India) Ltd. case, the Tribunal waived the pre-deposit and stayed the recovery of service tax, interest, and penalties during the appeal's pendency.

In conclusion, the Tribunal ruled in favor of the appellant, M/s Zenith Computers Ltd., by granting a waiver of the pre-deposit of service tax, interest, and penalties, as the activity of promoting brand names did not fall under the category of "Business Auxiliary Services" for the period before July 2010, based on the interpretation of relevant legal provisions and precedents.