2021 (9) TMI 751 - AT - Service Tax

Business Auxiliary Service - promotion or marketing of goods produced or provided by or belonging to the client to CCIPL - HELD THAT - The issue is decided in the case of M/S KANDHARI BEVERAGES P LTD VERSUS C.C.E. - CHANDIGARH 2020 (11) TMI 925 - CESTAT CHANDIGARH where it was held that no demand of service tax is sustainable against the appellant. No demand of service tax is sustainable - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of "Business Auxiliary Service" in the context of promotion or marketing activities related to goods provided by the client.

Analysis:
The case involved an appellant engaged in the distribution and sale of nonalcoholic beverages under a Bottlers Agreement with a renowned company. The appellant purchased concentrates from an authorized entity for manufacturing final products and received claims in the form of credit notes. The Revenue alleged that the appellant was providing "Business Auxiliary Service" by promoting the sale of concentrates, leading to show cause notices and subsequent demands, interest, and penalties. The appellant contended that their activities aimed at promoting the final product, not the concentrate, and cited a precedent to support their argument.

The Tribunal referred to a previous case involving similar issues and held that the appellant's case was covered by established decisions. They emphasized that the transfer of possession for consideration in the ordinary course of trade constituted a sale, rejecting arguments that the transaction was merely a transfer for use. The Tribunal dismissed the Revenue's contentions and highlighted that interpreting every manufacturer's sale promotion activities as promoting the raw material supplier's goods would not align with the taxable category of "Business Auxiliary Service."

Additionally, the Tribunal distinguished a decision relied upon by the Revenue, emphasizing the independence of business entities in promoting their products and inputs. They clarified that advertisement expenses incurred by the manufacturer were part of the sale price, and the High Court's decision did not support the Revenue's contentions. Ultimately, the Tribunal found no merit in the Revenue's arguments, setting aside the impugned order and allowing the appeal based on the settled issue in favor of the appellant.

Conclusively, the Tribunal ruled that no demand of service tax was sustainable against the appellant, aligning with the precedent set in the case of Kandhari Beverages Pvt.Ltd. They set aside the impugned orders and allowed the appeals, providing consequential relief.