2017 (9) TMI 420 - AT - Service Tax

Business Auxiliary Service - the appellant have carried out the activity of chemist association and was charging some amount from the manufacturers to circulate the product information among its members - whether the activity carried out by appellant would be taxed under the head Business Auxiliary Services? - Held that - the identical issue has come up before the Tribunal in the case of Federation of Gujarat State Chemist & Druggist Assn. Vs. CCE, Rajkot 2012 (7) TMI 501 - CESTAT, AHMEDABAD , where it was held that the purpose is to help the members of the association to know the margins and also to ensure that by at correct price and get the proper margins in their business, mere publication of name of the company and the details explained above cannot amount to sale or promotion - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of "Business Auxiliary Service" for an activity related to a chemist association charging manufacturers for product information dissemination.

Analysis:
The case involved an appeal against an order passed by the Commissioner (Appeals), Jaipur-I, concerning the classification of an activity carried out by a chemist association during the period from 01.10.2004 to 22.07.2009. The appellant charged manufacturers for circulating product information among its members. The Department contended that this activity falls under "Business Auxiliary Service" and is subject to service tax. The appellant disputed this classification and sought a refund of the service tax deposited. The Tribunal heard arguments from both parties and referred to a similar case where it was held that merely providing product information to chemists and druggists does not constitute promotion or marketing for the purpose of service tax under Section 65(19) of the Finance Act, 1994.

The Tribunal considered the arguments put forth by both parties in detail. The Revenue contended that the publication of product details in the association's monthly news magazine amounted to business auxiliary service as it facilitated the promotion of sales by providing pricing information to chemists and druggists. However, the appellant argued that the information shared was limited to product and pricing details, primarily benefiting chemists and druggists, and did not constitute promotion or marketing of products. The Tribunal agreed with the appellant's submissions, highlighting that the information provided was not aimed at promoting sales but rather served as useful data for the members.

Furthermore, the appellant argued that the service provided did not fall under business auxiliary service as a separate taxable service related to the sale of space or time for advertisements was introduced w.e.f. 1.6.2007. The appellant claimed that the monthly news published by them could be considered a newspaper based on legal precedents and thus should not be taxed as a business auxiliary service. The Tribunal found merit in this argument, emphasizing that the activity of selling space in the monthly news was distinct from promoting sales or marketing goods. Therefore, the Tribunal set aside the impugned order and allowed the appeals, granting consequential relief to the appellant.

In conclusion, the Tribunal's decision in this case clarified that providing product information to chemists and druggists, without actively promoting sales or marketing, does not constitute business auxiliary service subject to service tax. The judgment also highlighted the distinction between providing information and engaging in promotional activities, ultimately ruling in favor of the appellant and granting the requested refund.