TMI Blog2024 (2) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... ve and sale promotion receipts, to be towards the provison of business auxiliary services . As the demand of service tax itself is set aside on merits, the issue not considered on grounds of limitation. Further since the demand of service tax is set aside so is the demand of interest and the penalties imposed. Appeal allowed. - MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) AND MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) Shri Atul Gupta, Advocate and Shri Prakhar Shukla, Advocate for the Appellant Shri Santosh Kumar, Authorised Representative for the Respondent ORDER This appeal is directed against order in original No 86/Commissioner/ Noida/ 2012-13 dated 31.03.2013 of the Commissioner Customs, Central Excise Service Tax Noida. By the impugned order following has been held:- ORDER 1. I hereby confirm the demand of service tax amounting to Rs. 70,18,810/-(Rupees seventy lakhs eighteen thousand eight hundred and ten only)against M/s Beltek Canadian Water Ltd. A-16, Hosiery Complex Phase-ll, Noida under Section 73(1) of the Finance Act, 1994 2. I order to recover the above said confirmed dues along with appropriate rate of interest as provided under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver whereas they had shown income on account of incentive received from the franchiser in the Balance sheets of said period IV. Also, the party has contravened the provisions of Section 68, Section 69, Section 70 of the Finance Act 1994 read with Rule 4. 6 7 of the Service Tax Rules 1994, with intent to evade payment of Service Tax. 2.5 By a show cause notice dated 18.09.2012 appellant was asked to Show Cause as to why:- 1) Service Tax amounting to Rs. 70,18,810/-(Rupees Seventy lakhs eighteen thousand eight hundred and ten only) (Service tax amounting to Rs. 68,14,379/- Education Cess amounting to Rs. 1,36,287/-. HSEC amounting to Rs. 68,144/-) for the period from April 2007 to March #39; 2012. on account of payment received amounting to Rs.7,28,95,102/- in respect of Business Auxiliary Services should not be demanded and recovered from them under proviso to Section 73(1) of Finance Act, 19942) 2) Interest on delayed payment of Service Tax should not be demanded under Section 75 of the Finance Act, 1994. 3) Penalty should not be imposed upon them under Section 76, 77 78 of the Finance Act, 1994 for the contravention of provisions of Finance Act, 1994/ Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax. The amount received by them is on account of various marketing schemes and cannot be subjected to service tax. Thus out of the total amount of Rs. 7,28,95,102/- they have received Rs. 3,84,63,104/- on account of achieving the sales target and Rs. 3,44,31,998/- on account of various joint marketing schemes. Further details of joint marketing scheme are that they received Rs. 38,36,922/- against supply of free dispenser, Rs. 27,04,821/- against jar security, Rs. 41,04,990/- against incentives given to sales executives, Rs. 48,58,939/- only against supply of free water Jars, Rs. 80,21,514/- against other expenses and special incentives, Rs. 1,08,06,013/- against jar breakage and Rs. 98,800 as transport cost. Party contested that from above submissions it is evident that they are not providing any service to PFPL and therefore no service tax is payable by them. They have also argued that, if at all the service tax is payable by them, the demand upto March 11 is time bared and extended proviso to Section 73(1) cannot be invoked in their case since they have not suppressed any fact from the department. They were under bonafide belief that no service tax is payable by them as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l dressed personnel to sell and deliver the product. Therefore, as per the said agreement the party had been authorized to use and affix the trademarks of the Pepsi on the product as also the use of the proprietary rights in the caps and closures for the manufacturing, producing, marketing, selling and distribution of Aquafina Bulk Packaged drinking water and they are paying royalty to the franchisor i.e. Pepsi. It is also provided that as a franchisee they have been granted representational right to manufacture and sell goods and provide any services and undertake any process identified with the franchisor, which would be for the purposes of their own business. Thus, any activities undertaken by them such as providing discounts to the customers or providing free dispensers/jars to the consumers is for the promotion of their own business activities and not that of the Pepsi exclusively and also at times certain marketing schemes were jointly decided and launched by them with the Pepsi and the expense were incurred upfront by them and a debit note was raised on Pepsi for their share of expenses and the payments received by the party from Pepsi were against the share of Pepsi i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 65 (19) of the Finance Act, 1994 The Business Auxiliary Service is defined under Section 65 (19) of the Finance Act. 1994 as follows:- 11(19) 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) promotion or marketing of service provided by the client; or (iii) any customer care service provided on behalf of the client: or (iv) procurement of goods or services, which are inputs for the client; or [Explanation - For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, inputs means all goods or services intended for use by the client;] (v) production or processing of goods for, or on behalf of the client; or] (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services management or supervision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24312 2504506 Total 7,28,95,102 6,58,76,293 68,14,379 1,36,287 68,144 70,18,810/- Thus from above it is evident that the party has received an amount of Rs. 7,28,95,102/- on account of Business Auxiliary Service and is liable to pay an amount of Rs. 70,18,810/- (Service tax amounting to Rs. 68.14,379/- plus Education Cess amounting to Rs. 1,36,287/- plus HSEC amounting to Rs. 68,144/-) for the period from April 2007 to March 2012 along with interest. 4.3 The only issue for consideration in this appeal is whether the sale incentive, advertisement and publicity charges received by the appellant can be subjected to service tax, under the taxable category of Business Auxiliary Services. We find that the issue involved in the present case is no longer res-integra. Reliance is placed on the following decisions: Superior Drinks Pvt Ltd [2019 (6) TMI 272 CESTAT Mumbai] Narmada Drinks (P ) Ltd [2017 (5) GSTL 369 (T-Del)] Narmada Drinks (P ) Ltd [2018 (6) TMI 899 CESTATDelhi] Brindavan Bottlers Ltd [2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we fail to see how the promotion of the brand name can be brought under the above clause. The appellant has received concentrate from M/s. Coca Cola. Obviously, the appellant is not marketing or selling the concentrate as a brand name. The appellant's contention is that they are manufacturing the goods bearing the brand name and not the brand owners and therefore they cannot be charged service tax for marketing and promotion of sales of their own goods. 4.5 In case of Brindavan Bottlers Ltd [2019 (27) GSTL 354 (T-ALL)], Allahabad bench has observed as follows: 8. So far the next issue of the said appeal is concerned regarding reimbursement of advertisement and publicity and also the sales target incentives, it is explained by the Learned Counsel that such schemes - target schemes or incentive schemes are issued by the Coca-Cola Co. Ltd. of which the appellant is a franchisee bottler. Appellant on its own cannot issue any such scheme. Whatever schemes are floated by the Coca-Cola Company, the appellant is the implementing agency in their area of operation. Such expenses on actual basis for achieving the Sales target, incentive or advertisement and publicity expenses re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 . The definition of business auxiliary service may not cover the transaction in this case, as the main appellant is not promoting or marketing of services provided by PFL as there is no service which has been provided by PFL in the case in hand. The findings of the adjudicating authority that the agreement requires the main appellant to promote the trademarks, which in term is nothing but the goods, seems to be farfetched as in the case in hand there is no mention of trade marks in the definition of BAS (as reproduced herein above). In short, we conclude that the main appellant is not promoting or marketing or selling the concentrates which are produced or provided by PFL to them for manufacturing of aerated waters. 4.7 In case of Narmada Drinks Pvt Ltd [Final Order No ST/A/52245/2010-CU(DB) dated 18.06.2018] 5. After hearing both sides and perusal of record, we note that the lower Authority has held the appellant as liable to payment of Service Tax under BAS, for the amounts received from brand owners such as M/s Coca Cola India Ltd. for marketing of their product. It is well known that the bottlers receive concentrate from the brand owners such as M/s Coca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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