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2025 (1) TMI 73 - AT - Service TaxClassification of services - Appellant undertook activities of advertisement and sale promotion of concentrate/flavor belonging to Coca Cola India Pvt. Ltd. and received support price in consideration - Business Auxiliary Service or not - scope of SCN - extended period of limitation. Whether the Respondent was right in extending the scope of the show cause notice by way of confirming the disputed demand under Business Auxiliary Service when evidentially the show cause notice has not demanded the Service Tax under any particular service head? - HELD THAT - Reliance is placed in the case of SYNIVERSE MOBILE SOLUTIONS PVT LTD., (EARLIER TRANSCIBERNET INDIA PVT LTD.) VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, HYDERABAD IV 2023 (6) TMI 463 - CESTAT HYDERABAD , wherein it has been held it is essential for the show cause notice issuing authority to clearly indicate the sub-clause under which the service tax in question would fall. It is a settled principle of law that the Adjudicating Authority cannot go beyond the scope of SCN which has been laid down by the Hon'ble Supreme Court, inter alia, in cases of COMMISSIONER OF CUSTOMS, MUMBAI VERSUS TOYO ENGINEERING INDIA LIMITED 2006 (8) TMI 184 - SUPREME COURT , COMMISSIONER OF CENTRAL EXCISE, NAGPUR VERSUS M/S BALLARPUR INDUSTRIES LTD 2007 (8) TMI 10 - SUPREME COURT it has been held that the SCN is the foundation of the case against the assesse and it is not open for the Adjudicating Authority to confirm the demand by travelling beyond the scope of the SCN. Therefore, in the light of the above, the Impugned Order is liable to be set aside. Whether there is any element of service, particularly in the nature of Business Auxiliary Services as defined under Section 65(19) of the Finance Act, 1994, involved in receipt of reimbursement amount received from M/s. Coca Cola India Pvt Ltd for joint promotional activities conducted by the Appellant on cost sharing basis with CCIPL, with an objective of promotion of sale of beverages manufactured by the Appellant? - HELD THAT - The Appellant has undertaken promotion, marketing of their final product i.e. beverage and not that of concentrates (i.e. industrial input), therefore, the conditions specified in clause (i) of Section 64 (19) of the Act are not fulfilled. Accordingly, the demand in the present case is liable to be set aside - Appellant has not provided any Business Auxiliary Services to the CCIPL as per the provision of law, therefore, the Adjudicating authority has completely erred in invoking the Section 65(19)(i) in the instant case. Whether the Respondent is right in confirming the demand on the extended period of limitation? - HELD THAT - The onus to prove that Appellant has deliberately suppressed the facts from the Department and that such suppression was with intent to evade payment of duty is on the Department. However, in the impugned SCN, the Respondent has neither put forth any averment nor has produced any documentary evidence for establishing the suppression and mala fide intent on part of the Appellant. Therefore, the question of invocation of extended period of limitation does not arise at all. In the identical case of Commissioner of Central Excise ST., Lucknow vs. M/s. Brindavan Bottlers Limited 2019 (3) TMI 1428 - CESTAT ALLAHABAD , the Tribunal held that there is no element of service in expenses for achieving the sales target, incentive or advertisement and publicity expenses reimbursed to the Appellant by the Coca-Cola Company Ltd. There is no element of service, and the Appellant therein is not providing any service to Coca Cola Company Ltd and the Appellant therein and Coca Cola are working on a principal-to-principal basis. Reliance placed in SMV Beverages Private Limited vs. Commissioner of Central Excise, Nagpur 2017 (3) TMI 942 - CESTAT MUMBAI wherein in the identical set of facts the Tribunal has held that when the concentrate is sold on payment of excise duty to the main appellant, which would indicate that once the sale takes place, the concentrate does not remain the property of PFL. Conclusion - i) It is a settled principle of law that the Adjudicating Authority cannot go beyond the scope of SCN. ii) Appellant has not provided any Business Auxiliary Services to the CCIPL as per the provision of law. iii) in the impugned SCN, the Respondent has neither put forth any averment nor has produced any documentary evidence for establishing the suppression and mala fide intent on part of the Appellant. Therefore, the question of invocation of extended period of limitation does not arise at all. The impugned order cannot be sustained - appeal allowed.
1. ISSUES PRESENTED and CONSIDERED The core legal questions addressed in the judgment are:
2. ISSUE-WISE DETAILED ANALYSIS Issue I: Scope of the Show Cause Notice
Issue II: Element of Service in Reimbursement
Issue III: Extended Period of Limitation
3. SIGNIFICANT HOLDINGS
The judgment underscores the importance of clarity in tax demands and the protection of taxpayers from vague allegations. It also reinforces the principle that promotional activities for one's own products do not constitute services to another entity merely because of a cost-sharing arrangement.
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