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TMI Blog2020 (10) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... o the sole customer. The Promoter i.e. the appellant got paid at ₹ 8/- per case as service charges on the secondary sales of their brands during the period of agreement. All these factors make it abundantly clear that not only is the agreement titled as sales promotion agreement but the responsibilities of the appellant or that of sales promotion, there may be some other related incidental responsibilities and the payment to the appellant is based on the sales of the products. Although there is only one wholesale buyer, APBCL, their orders depend on the orders which the retailers place on the depots of APBCL. The appellant was specifically required to ensure that the retailers place maximum quantities of the client s products on APBCL depots. Thus, the services rendered by the appellant are in the nature of promotion and marketing of the clients products - the appellant is liable to pay service tax under Business Auxiliary Services for the services rendered by them. Extended period of Limitation - Penalty - HELD THAT:- The appellant has not taken the registration nor disclosed the nature of their activities to the Service Tax Department at any stage. It is only on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant. 4. Ld. Counsel for the appellant does not dispute that they had rendered services to the aforesaid companies and have received payments as indicated in the show cause notice. His argument is that the services which they have rendered are not classifiable as Business Auxiliary Services at all and therefore no service tax is payable. Consequently, the question of interest and penalties does not arise. He would submit that in the State of Andhra Pradesh, only one organisation viz; Andhra Pradesh Beverages Corporation Limited (APBCL) has right to sell Indian Made Foreign Liquors (IMFL) in retail. Therefore, all distilleries can only sell their IMFL to M/s APBCL. They have been employed by their service recipients to liaison and coordinate with M/s APBCL to market their liquor. He would take us through their agreement with M/s Shaw Wallace Distilleries Limited (SWDL), one of the service recipients, to argue that although the agreement is titled agreement for sales promotion, in effect there cannot be any sales promotion or marketing in this case because there was only one customer. There is no scope for expanding the customer base for any of the distilleries. The resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rations of the business. 5. Ld. Counsel would submit that although their agreement is titled as Agreement for Sales Promotion in fact there cannot be any sales promotion because there is no open market for the product and there is only one customer viz; Andhra Pradesh Beverages Corporation Limited (APBCL) for the entire state. Therefore, as can be seen from the above activities, the nature of their activities is one of the liaisoning with the single buyer, following up the payments, etc. He would argue that in view of the above, there is no sales promotion/marketing activity undertaken by them. 6. The definition of Business Auxiliary Service during the relevant period was as follows: Business Auxiliary Service means any service in relation to: i. Promotion or marketing or sale of goods produced or provided by or belonging to the client; or ii. Service in relation to promotion or marketing of service provided by the client includes any service provided in relation to promotion or marketing of games of change, organised, conducted or promoted by the client, in whatever form or by whatever name called, whether or not conducted online, including lottery, lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ob of sales promotion and marketing, when their own agreements with their principals show that their job is one of the sales promoter and they are getting paid based on the quantity of goods sold. Therefore, the demand and interest have been rightly confirmed by the adjudicating authority. 9. On the question of invocation of extended period of limitation, the appellant had never obtained service tax registration or approached the department or disclose to the department in any manner regarding their activity and therefore extended period of limitation has been correctly invoked for suppression of the information as well as the evident intent to evade payment of service tax. Accordingly, the penalties have also been correctly imposed. 10. We have considered the arguments on both sides and perused the records. Business Auxiliary Service is defined during the relevant period included the services related to promotion or marketing or sales of goods produced or provided by or belonging to the client. The agreements which have been entered into clearly state that the appellant has been employed as a promoter of the products of their clients. The argument of the Ld. Counsel is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin the stipulated time and forward the same to us immediately. (ii) To ascertain reasons and solve all matters pertaining to overdue outstanding, if any. (iii) Details of actual expenditure incurred on account of manpower, infrastructure, promotional activities, depot maintenance, incidental expenses and all other relevant expenses have to be furnished to SWDL on a monthly basis. (7) APBCL DEPOT OPERATIONS In the APBCL depots, Promoter will be responsible for the following functions: (i) Provide information on the inventory levels of our products and ensure that sufficient stock of our products is maintained at all depots. (ii) Coordination with the concerned Depot Managers, to ensure that sufficient quantity of our products are maintained always. (iii) EVCs duty certified are sent by the depots to the supplying distillery, as per the excise Rules/Acts. (8) RETAIL OPERATIONS: (i) Close coordination with the retails, to ensure that maximum quantities of our products are ordered from the depots. (ii) quick liquidation of stocks, from the retails, to ensure further ordering for our products and monitoring the shelf off-take of our products vis-a- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the said account. 11. For the aforesaid services, the Promoter i.e. the appellant got paid at ₹ 8/- per case as service charges on the secondary sales of their brands during the period of agreement. All these factors make it abundantly clear that not only is the agreement titled as sales promotion agreement but the responsibilities of the appellant or that of sales promotion, there may be some other related incidental responsibilities and the payment to the appellant is based on the sales of the products. Although there is only one wholesale buyer, APBCL, their orders depend on the orders which the retailers place on the depots of APBCL. The appellant was specifically required to ensure that the retailers place maximum quantities of the client s products on APBCL depots. We have no doubt in our mind that the services rendered by the appellant are in the nature of promotion and marketing of the clients products. In view of this, we find on merits that the appellant is liable to pay service tax under Business Auxiliary Services for the services rendered by them. 12. On the question of invocation of extended period of limitation, we find that the appellant has not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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