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TMI Blog2018 (7) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... tax on services rendered by them to independent manufacturers of alcoholic beverages. It was revealed that they had entered into agreements with different companies for the purposes as follows: a) Agreement dated 06.02.2002 titled as Manufacturing Agreement/ Contract Bottling Arrangement with M/s Gemini Distilleries Pvt. Ltd., Bangalore (GDPL) for providing them technical assistance and marketing services in respect of goods manufactured by GDPL under the trademarks owned by M/s Bacardi and Leichtenstein (Baco). Department has alleged that the amount of fee received by appellant under the said agreement/arrangement for the period w.e.f. July, 2003 to March, 2006 amounting to Rs. 1,71,53,164/- is taxable being amounting to Business Auxiliary Services (BAS) provided by the appellant to GDPL. b) Agreement dated 16.02.2001 with M/s White & Mackay (India) Ltd., New Delhi (WMIL) for providing marketing services to them and also for sale of IMFL manufactured by WMIL or procured by them from other manufacturers. The Department has alleged that the services as provided by the appellant to WMIL under this Agreement for the period w.e.f. July, 2003 to June, 2004 amounting to Rs. 33,46,259 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being provided by the appellant to GDPL. 7. With respect to agreement with WMIL it is submitted that though the services as provided by appellant to WMIL are wrongly alleged to be Business Auxiliary Services but the Business Auxiliary Services came into tax net w.e.f. 01.09.2009 only. Otherwise also the services may be categorised as business support service but the levy under Business Auxiliary Services is not sustainable. With regard to agreement with WGM, it is submitted that the appellant were exporting the services to the distributors abroad and they were receiving the payments in foreign currency. Service charges so received are exempted from the liability of service tax vide a Circular dated 25.04.2003. Finally, relying upon a voluminous case law with maximum emphasis on Redico Khaitan Ltd. vs. Commissioner of Service Tax, Delhi 2016 (44) STR 133 (Tri.-Del.), the appellant has prayed for the impugned order to be set aside and Appeal to be allowed. 8. While rebutting these arguments, it is submitted by the Ld. DR that the appellant's own agreement falsify all assertions of the appellant. Clause 5.2 of the agreement with GDPL specifically mentions that the appellant shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cases falls within the expressed ambit of the above definition of Business Auxiliary Services. We will take three of the agreements one by one. (i) The manufacture agreement/ contracting bottling arrangement with GDPL. From the perusal of the contract, the true commercial nature of the same between the appellant and GDPL appears that vide the said arrangement appellant had undertaken bottling operations through GDPL in its role as an entrepreneur and the entire risk and reward in relation to such a bottling activity is to the account of the appellant. GDPL has undertaken bottling of IMFL products of Bacardi brand which is owned by Baco abroad and for Indian territory it is the product of the appellant. Resultantly, what appears from this contractual arrangement is that the GDPL is providing service to the appellant while manufacturing the product under the brand name of the appellant. While providing any technical know-how, the specifications, marketing strategies and even providing promotional services to GDPL, appellant is actually providing those services to sell, the product marketed being the product of the appellant itself. GDPL is merely a Contract Bottling Unit (CBU). T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement for providing Business Auxiliary Services. Hence, to that extent, the Order has no infirmity and the said demand is accordingly upheld. (iii) Now coming to the agreement with WGS, it is observed that WGS is an entity based outside India. Though the appellant were providing marketing and promotional services to them but the recipient being abroad, the appellant were receiving remuneration in convertible foreign exchange from WGS. There has been a Notification No. 6/99 dated 09.04.1999 providing exemption to taxable services where consideration was received in convertible foreign exchange. Though this exemption was withdrawn vide another Notification No. 2/2003-ST w.e.f. 01.03.2003, but subsequently vide Notification No. 21/2003 - ST dated 20.11.2003, the exemption was restored. The Adjudicating Authority has declined this exemption to the appellant solely on the ground that there was no exemption on the taxable services received in convertible foreign exchange was available for a period w.e.f. 01.03.2003 to 20.11.2003 which includes the impugned period. But the Adjudicating Authority has ignored the CBEC Circular No. 56/5/2003-ST dated 25.04.2003, vide which it was clarified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of export services. In such circumstances and also in view that the appellant though has been registered for service tax but not as provider of Business Auxiliary Service but as recipient of goods transport service only. Resultantly, no suppression of facts can be alleged against the appellant. It has been settled even by Hon'ble Supreme Court that the burden of establishing intent to evade payment of tax is that of the Department and that the same must be established with cogent positive evidence. The Department has not produced any such evidence on record which may suggest that appellant has acted with an intent to evade payment of tax. Hence, there was no justification by the Department to invoke the extended period of five years while issuing the Show Cause Notice. The only taxable service in the category of Business Auxiliary Service has been observed to have been rendered by the appellant to WMIL as discussed above but the period of demand thereof is w.e.f. July, 2003 to June, 2004. The Show Cause Notice is dated 09.02.2007. Hence, the demand is beyond the period of one year and as such is held not sustainable. 10. As a result of entire above discussion, the Order under ch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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