Mere Participation in Promoting Brands would not attract Service Tax Liability: CESTAT [Read Order]

Promoting Brands - Taxscan

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Delhi bench, in the case of Narmada Drinks Pvt. Ltd v. C.C.E. & S.T.-Raipur held that mere participation in promoting brands such as Pepsi and Coca Cola would not render Service Tax liability.

The assessee receives concentrate from the brand owners such as M/s Coca Cola, manufacture aerated products therefrom and sell the same. The Revenue took a stand that the soft drink manufacturers (owner of brand name) are paying certain amounts to the bottlers including the appellant in the name of ‘Support Price’ towards services rendered by way of marketing and promotional activities and imposed tax under the head ‘Business Auxiliary Services.’

The appellants contended that they are manufacturing and selling the aerated water bearing the brand name and are not engaged in marketing or promotion of the said goods.

The Tribunal bench, on a second appeal filed by the assessee, noted that the amounts have been received from the brand owners to promote and market the brand name of such brand owners. One of the activities for which BAS is leviable is for Promotion or Marketing or Sale of Goods Produced or Service provided.

“From the activities undertaken by the appellant, it is evident that they have not acted towards marketing and promotion or sale of goods produced by their client. At best it can be said that they have participated in promotion of the brand name of ‘Coca-Cola’, ‘Pepsi’ etc. Such activities cannot be brought under ‘Promotion or Marketing or Sale of Goods Produced or Service Provided by the Client’, appearing under ‘Business Auxiliary Service’,” the bench said.

Subscribe Taxscan Premium to view the Judgment
taxscan-loader