2014 (8) TMI 413 - AT - Service Tax

Demand of service tax - Agreement for marketing country liqour - Held that - Appellants are the manufacturer of country liquor under the brand name Pahili Dhar which is a registered trade name of the appellant themselves. The appellants are having the agreement with M/s. Talreja Trade (HUF) for marketing this liquor. Therefore, it cannot be said that the appellant are the job workers for Talreja Trade. Further, if at all any demand of service tax could have been made, that could have been made against only Talreja Trade as they are the selling agents of the appellants. With these observations, we find that the appellant are not liable to pay service tax under Business Auxiliary Service on the above mentioned activity - Decided in favour of assessee.

Summary

Issues:
Service tax demand confirmation against appellants under the Finance Act, 1994 for being job workers for another entity.

Analysis:
The appellants appealed against an order confirming a service tax demand of Rs. 2,26,147/- along with interest and penalties under the Finance Act, 1994. The Revenue alleged that the appellants, who are manufacturers of sugar and denatured spirit/ethanol under the brand name "Pahili Dhar," were acting as job workers for M/s. Talreja Trade (HUF) in the manufacturing of country liquor. The Revenue contended that the raw materials were supplied by Talreja Trade, making the appellants liable to pay service tax under "Business Auxiliary Service."

Upon detailed consideration of the case, it was established that the appellants were the actual manufacturers of country liquor under their registered brand name "Pahili Dhar" and had an agreement with Talreja Trade for marketing the liquor. The Tribunal found that the appellants were not working as job workers for Talreja Trade but were the principal manufacturers themselves. The Tribunal noted that any service tax liability, if applicable, should be on Talreja Trade as they were the selling agents of the appellants. Consequently, the Tribunal allowed the appeal, stating that the appellants were not liable to pay service tax under "Business Auxiliary Service" for the mentioned activity, providing consequential relief.

Additionally, the Tribunal waived the requirement of pre-deposit of the entire demand amount and proceeded with the final disposal of the appeal. The stay application was also disposed of in the same manner as the appeal. The judgment clarified the distinction between the roles of the appellants as manufacturers and Talreja Trade as selling agents, leading to the dismissal of the service tax demand against the appellants.