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2017 (3) TMI 1106 - AT - Service TaxBusiness auxiliary service - whether the amounts received from Coca Cola under the heads Sales Target Incentive and Advertisement and Publicity expenses are covered under business auxiliary service? - The SCN alleges that the appellant has received the aforesaid amount from the brand owners to promote and market the brands of the brand owners - Held that - BAS is an omnibus service covering within its fold various types of services. It has not been indicated either in the Show Cause Notice or Order-in-Original under which sub clause the appellant s service is being charged to service tax. By process of elimination, we conclude that it is likely to be under Promotion or marketing or sale of goods produced or service provided by the client ; we note that no investigation has been undertaken by Revenue into the reasons for which appellants have received the payments. Hence, it is not very clear why the appellant has received the said amounts from M/s Coca cola When we look at the clause (i) the definition of the BAS, which covers promotion or marketing or sale of goods produced or service provided, we fail to see how the promotion of the brand name can be brought under the above clause. A new service stands introduced with effect from 1.07.2010, which covered specifically Brand Promotion Service - Even if a view is taken that the service rendered by the appellant is covered under the new service w.e.f. 01.07.2010, the same cannot be charged to service tax under BAS for the earlier period - this is established by the Tribunal in the case of Sourav Ganguly vs. Union of India 2016 (7) TMI 237 - CALCUTTA HIGH COURT . There is no justification for the demand of service tax raised under BAS for the period 2006-07 to 2009-2010 - appeal allowed - decided in favor of appellant.
Issues:
1. Demand of service tax under "Business Auxiliary Service" on the appellant. 2. Applicability of service tax for the period prior to 1.7.2010. 3. Interpretation of the term "Business Auxiliary Service" under Section 65(19)(zzb). 4. Justification of the demand of service tax based on the nature of payments received. Issue 1: Demand of service tax under "Business Auxiliary Service" on the appellant. The appellant, a manufacturer of aerated water and an authorized bottler of Coca Cola, received amounts under "Sales Target Incentive" and "Advertisement and Publicity expenses." The Department alleged that these amounts were for brand promotion of Coca-Cola, leading to the demand of service tax under "Business Auxiliary Service" as per the impugned order. Issue 2: Applicability of service tax for the period prior to 1.7.2010. The appellant argued that the new service for brand promotion came into effect from 1.7.2010 and cannot be applied for the period before that date. They contended that the activity does not fall under "Business Auxiliary Service" for the prior period as it covers only promotion and marketing of goods/services. Issue 3: Interpretation of the term "Business Auxiliary Service" under Section 65(19)(zzb). The Tribunal noted that the appellant's service was likely charged under "Promotion or marketing or sale of goods produced or service provided by the client" within BAS. However, the lack of investigation into the reasons for the payments received made it unclear why the amounts were received from Coca-Cola for brand promotion. Issue 4: Justification of the demand of service tax based on the nature of payments received. The Tribunal analyzed that the promotion of the brand name by the appellant, who manufactures goods under the Coca Cola brand, does not fit under the BAS definition covering marketing or sale of goods. Referring to a TRU letter, it was highlighted that a new service for brand promotion was introduced from 1.7.2010, and activities covered under the new service cannot be taxed under BAS for the earlier period. In the judgment, the Tribunal found that the demand of service tax under BAS for the period 2006-07 to 2009-2010 lacked justification. Citing precedents and legal interpretations, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.
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