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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 ..... Thus, they appeared to have contravened provisions of Sections 68, 69 and 70 of the Finance Act, 1994. After investigation and procuring necessary details from the appellant, a show cause notice dated 17.10.2008 was issued demanding an amount of Rs. 52,82,725/- as service tax (including Education Cess) on the service charges received by them during the period 01.07.2003 to 31.03.2005 under the proviso to Section 73 of the Finance Act, 1994, invoking extended period of limitation. The Show Cause Notice also sought to demand interest under section 75 of the Finance Act, 1994 and impose penalties upon the appellant under Sections 76, 77 & 78 of the Finance Act, 1994. After following due process, the Ld. Commissioner, by the impugned order, has confirmed the demand and interest and imposed penalties as proposed. Aggrieved, this appeal is filed by the appellant. 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the duration of this agreement. The said charges shall be subject to TDS at actual as applicable in force and review from time to time. The service charges shall be paid on submission of depot wise secondary sale duly authenticated by SWDL's Area Manager and the payment shall be made by 10th of every consecutive month. Over and above, the service charges payable to the promoter as per the above mentioned clause, no other form of remuneration or service charges shall be payable by SWDL to the Promoter. All expenses on account of offices, manpower, telephone, postage, incidental and all other forms of outgoings will be entirely to the Promoter's amount. All salaries, travel expenditure of executives, office maintenance, incidental expenses at APBCL, shall be paid promptly in time by the promoter for smooth operations 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and marketing. They were getting paid @ Rs. 8/- per case of the marketed product. Although there was only one buyer viz; M/s APBCL, there were several sellers, some of whom have employed the appellant as their sales promotion/marketing agent. Not only is the agreement meant for sales promotion, a bare perusal of the agreement would show that the pith and substance of the agreement is of sales promotion and marketing activity. In the course of sales promotion and marketing, the person who is marketing the products also liaisons with the customers in any such agreement and collects information regarding orders, etc. and sends the reports to the principal company. Therefore, there is no force in the argument of the appellant that they were not rendering the job 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y our marketing departments before implementation. 5. (a) Responsibility of secondary sales at various APBCL depots shall be entirely Promoter. (b) Manpower employed to promote these brands shall be on the Promoter's role and Shaw Wallace Distilleries Limited shall have no liability. (c) Liaison with APBCL will be Promoter's responsibility. (d) Inter depot stock transfer if any, will be to the Promoter's account subject to a maximum of Rs. 2.40 lacs per year. 6. The promoter shall send weekly/fortnightly/monthly reports to Shaw Wallace Distilleries Limited on all the activities carried out in the market, APBCL, Excise etc." (6) PAYMENTS: The promoter will ensure (i) To obtain payment from APBCL of pending bills within 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 res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cing, packaging, promotions, sourcing etc. which can make an impact on SWDL's business. (iii) The promoter shall keep the company informed about the changes in his organisation promptly. (iv) The promoter shall not assign, delegate or otherwise deal with all the or any of your rights or obligations under this appointment without the Company's prior consent. (v) The Promoter shall not appoint any sub-agent without the company's prior consent. (vi) The Promoter must open separate bank account to meet the Sales Promotional activities expenses. Shaw Wallace Distilleries Limited shall send cheques only to that account and Shaw Wallace Distilleries Limited shall also monitor the transactions of the said account." 11. For the aforesaid services, the Promoter i.e. the appellant got paid at Rs. 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 sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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