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2019 (6) TMI 272 - AT - Service TaxBusiness Auxiliary Services - short paid/non paid service tax - sale, promotion & the marketing activities for beverages undertaken by the appellants directly promotes the sale of concentrate manufactured by or on behalf of Coca Cola, Coca Cola India (CCI) on behalf of Coca Cola USA reimburses the cost proportionately - demand of interest and penalty - extended period of limitation. HELD THAT:- The clause of the definition which is relevant for such invocation is “i. Promotion or marketing or sale of goods produced or provided by or belonging to the client;”. A plain reading of the said clause will make it evident that the activities undertaken by the service provider should be towards promotion or marketing or sale of goods produced or provided by the service recipient. In the present case how the Bottler Agreement or the clause 5 of the Business Protocol 2012, support such an conclusion is beyond comprehension of a rational mind. The clause 5 of Business Protocol clearly is not establishing the relationship of service provider and service recipient between the appellants and Coca Cola India - Appellants use the concentrate supplied/ procured from Coca Cola India, for the production/ manufacture of finished products. They sell their finished products in the market as pr the plan and marketing strategy finalized by them in association with the brand owners. The objective of the sale promotion activities undertaken by them is to promote the sale of Beverages of various brands owned by Coca Cola USA and bottled by them. Any further extrapolation made by revenue for drawing the conclusion is beyond the express intent of the Bottler Agreement. Since as the sale of his finished goods goes up automatically consumption of inputs will go up and accordingly he promotes the sale of input manufacturer/ supplier. In our view such an interpretation is neither logical or rational. Both input suppliers and the finished product manufacturer are independent business entity acting in the interest of their business. From the definition of “service” as per section 65B(44), the essential ingredient of same are “any activity carried out by a person for another” and “consideration for undertaking such and activity”. Admittedly the dispute is not in respect of declared services or negative list of services or those falling in the exclusion clause. The phrase “any activity carried out by a person for another”, is very clear that the activity sought to be taxed, should be the activity carried out by one person for the another person. Thus any activity which has been undertaken by a person on his own account for himself cannot be said to be covered by the said phrase even if this activity is undertaken by the person with the financial assistance/ support of other person either partially or completely - In the present case the appellants were undertaking the marketing and sales promotion activity on their own account, Coca Cola India was only providing certain financial assistance in undertaking such activity. The activity undertaken were not performed by the appellant for Coca Cola India, but was performed for themselves. Since no activity has been performed by the appellant for Coca Cola India, we are of view that mere receipt of amounts under the head “Market Support Received” will qualify them as “service” under Section 65B(44). Since we are deciding the issue on the merits itself and dropping the demand as not maintainable we do not take other issues of limitation and penalty argued before us in this appeal. The demand of service tax set aside - appeal allowed - decided in favor of appellant.
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