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2015 (12) TMI 1403 - CESTAT NEW DELHI

2015 (12) TMI 1403 - CESTAT NEW DELHI - 2016 (42) S.T.R. 55 (Tri. - Del.) - Demand of service tax - franchise service - presumption and arbitrary quantum while doing best judgement assessment - Suppression of facts - invocation extended period of limitation - Held that:- Adjudicating authority has observed that the appellant “deliberately tried to suppress the facts from the Department” and then adds that “M/s. Carlsberg India Pvt. Ltd. wilfully suppressed all the material facts regarding nature .....

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pany. The appellant did not provide the alleged services, but was the recipient of the alleged services.

In the Show Cause Notice dated 18.10.2012, the figures for 2011-12 have been taken to be 10 times those for 2010-11 under the “best judgment assessment” without any basis / reason which almost smacks of outright mala fide and the adjudicating authority blindly adopted those figures under “best judgment assessment” without even a whisper as to how such a quantum jump (tenfold) in th .....

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it so amply clear that the order fatally suffers from lack of analysis/discussion regarding the contentions and arguments of the appellant and makes a mockery of the quasi-judicial process in-as-much-as it is not merely non-speaking, but also absurd in parts.

In the absence of analysis/reasoning with reference to the contentions of the appellant, the conclusions drawn in the impugned order are rendered lifeless - we set aside the impugned order and remand the case to the adjudicating .....

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against Order-in-Original No.205-210/GB/2013, dated 23.11.2013 in terms of which following service tax demands along with interest and penalties were confirmed. The demand was confirmed in respect of six Show Cause Notices summarised as under:- Sl. No. Show Cause Notice No. & Date Period covered in SCN Impugned demand of Service Tax (Rs.) 1. C. No.D-III/ST/R-II/SCN/ Carlsberg/187/2010/2290 dated 30.05.20111 2007 - 08 to 2009 - 10 67,74,997.00 2. C. No.D-III/ST/R-II/SCN/ Carlsberg/187/2010/5 .....

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tered for service tax at Gurgaon under the categories of :Transport of Goods by Road Service , Intellectual Property Service other than Copyright , Management Consultants Service , Test, Inspection, Certification Service , Market Research Agency Service and Scientific and Technical Consultancy Service . The appellant was manufacturing beer under the Trademarks owned by M/s. Carlsberg Breweries A/S, Denmark. The appellant entered into the India Licence Agreement (ILA) dated 07.12.2006 with Carlsb .....

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the amount of royalty paid to M/s. Carlsberg Denmark on which the appellant did not discharge service tax liability. When the case was taken up for stay application during the hearing, both sides agreed that the appeal itself could be disposed of. Accordingly, we waive the requirement of pre-deposit and proceed to dispose of the appeal. 3. Ld. advocate for the appellant essentially contended that (i) The appellant had made the following statements before the adjudicating authority:- (a) Carlsber .....

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one Show Cause Notice for the transactions regarding granting of the right to use the trademarks under the ILA were issued during the same relevant period and that too demanding service tax under two different taxable services, namely Franchise Service and IPR Service. (e) No consideration has been paid by the appellant to Carlsberg, Denmark. Hence, no service tax is payable on the alleged service. (f) Even assuming without accepting that there was a consideration for the grant of the right to u .....

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the wrong understanding that there was consideration not wholly consisting of money. (i) The arrangement between the appellant and Carlsberg Denmark did not satisfy the ingredients of a franchise agreement. (j) Even if it is assumed without accepting that non-monetary consideration is involved in the impugned transaction, the value of similar services by Carlsberg, Denmark to any other person is the taxable value to be adopted. (k) Without prejudice to the other submissions, it was submitted tha .....

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e before the adjudicating officer too. It also claimed to have provided the actual figures to the Commissioner but the Commissioner resorted to best judgement assessment in respect of demand confirmed under franchise service for the periods 2010-11 and 2011-12. Under the best judgement assessment, the figure for 2010-11 was taken to be double of the preceding year and the figures for 2011-12 was taken as 10 times that for 2010-11 without giving any basis. (iii) The adjudicating authority did not .....

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hat its contentions have not been dealt with by the adjudicating authority, we deem it proper to quote paras 36 to 41 of the impugned order, which contain the entire analysis in the impugned order and are reproduced below:- 36. In view of the above mentioned submissions I am of the view that: The Indian subsidiary and the foreign principal entered into an agreement dated December, 2006, whereunder the Indian subsidiary was required to pay royalty to the foreign principal and the foreign principa .....

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) retrospectively. The departments allegation is waiving off right is a service non-monetary consideration = Royalty (tax was charged on IPR & Franchisee Service). The last two SCNs are based on Best Judgement. Further the benefit of Notification No.17/2004-ST towards R&B cess was not given. Further SCNs are based on details submitted during investigation and there is quantification error by the tax payer after submitting the reply in March 2012. Further, issues are made clear in the fol .....

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tween M/s. CIPL & M/s. Carlsberg Breweries A/S, Denmark are clearly in the nature of temporary transfer of the use of Trademark, which is owned by M/s. Carlsberg Breweries A/s, Denmark. Therefore it is clear that the Ms. Carlsberg Breweries A/S, Denmark has provided the service to M/s. CIPL, which falls under the category of Franchisee Service , defined under Section 65 (105) (zze) ibid, effective from 01.07.2003 as amended and the contentions of the noticee that M/s. Carlsberg Denmark was n .....

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ted by other, as inducement to the other s act or promise, and therefore it is clear, that M/s. CIPL is liable for payment of Service Tax under Section 67(ii) of Finance Act, 1994 on the amount of Royalty paid in the form of consideration. 37. I therefore hold that M/s. CIPL is liable to pay service tax on amount of royalty paid to M/s. Carlsberg breweries A/s, Denmark in terms of notification no.11/2006-ST dt.19.04.2006, and it is also observed that M/s. CIPL failed to determine the gross value .....

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terial facts regarding the nature of services provided by them in respect of Intellectual Property Service Other than Copyright and the gross amount received by them during the aforesaid period as Royalty/franchisee services and at no stage did they enquire about taxability of their services. It is due to the investigation by the department, that the said facts of providing the services & non-payment of service tax by them came to notice. I find that the extended period of five years under .....

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e Finance Act, 1994, for not paying the appropriate Service Tax with an-intent to evade payment of Service Tax and/or by suppressing the facts & value of taxable service from the Service Tax Department. (iii) Penalty needs to be imposed upon them under Section 76 of Chapter V of the Finance Act, 1994 for not paying the appropriate Service Tax by the prescribed due dates; (iv) Interest on the amount determined to be payable by the said noticee should be charged from them under Section 75 of C .....

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N/ Carlsberg/187/2010/4649 dated 18.10.2012 - Amount ₹ 4,51,66,650/-. On similar issue is being confirmed on same lines as per CBEC Circular No.752/68/2003-CX dated 1.10.2003, and M/s. CIPL is liable to pay interest and penalty in the similar ratio as per order in the instant case, along with service tax demanded respectively in each case. From the perusal of the aforesaid paragraphs, it becomes loud and clear that none of the contentions of the appellant have been analysed in the impugned .....

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than Copyright and the gross amount received by them during the aforesaid period as royalty / franchisee service and at no stage did they enquire about taxability of their services . It is obvious that the paragraph has been written without application of mind because in the present case no amount was received by the appellant as royalty/franchise service ; indeed the appellant paid the amount to foreign based company. The appellant did not provide the alleged services, but was the recipient of .....

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