Tribunal rules in favor of appellant-assessee on service tax issue for refrigerator supply

The tribunal ruled in favor of the appellant-assessee, stating that service tax was not applicable on the supply of refrigerators to dealers/distributors and reimbursement of expenses from Coca-Cola Co. Ltd. The tribunal clarified that possession and control post-delivery were with dealers/distributors, and the appellant only received rent subject to VAT/Sales Tax. Additionally, the charges for holding bottles were not for providing a service but to encourage timely return for re-use, hence not subject to service tax. The appeal by the appellant was allowed, and the revenue's appeal was dismissed, granting consequential benefits as per the law.

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Issues:
1. Whether the assessee is liable to pay service tax under the category "Supply of Tangible Goods Service" on venting of refrigerators to their dealers/distributors and on reimbursement of advertisement expenses and other sales promotion expenses.
2. Whether the appellant is liable to pay service tax on Bundle Holding Charges under the category SOTG and on Sales Target Incentives received from Coca-Cola Co. Ltd.

Analysis:
1. Issue 1 - Assessee's Appeal:
- The assessee argued against paying service tax under the "Supply of Tangible Goods Service" for venting refrigerators to dealers/distributors and reimbursement of expenses from Coca-Cola Co. Ltd.
- The tribunal examined the definition of taxable service under Section 65(105)(zzzzj) and clarified that supply of tangible goods for use, where possession and control are transferred, is not subject to service tax.
- Since the dealers/distributors had effective control post-delivery of refrigerators and the appellant only received rent subject to VAT/Sales Tax, the tribunal ruled that service tax was not applicable in this scenario.
- Regarding reimbursement of expenses, it was established that the appellant acted as an implementing agency for schemes by Coca-Cola Co. Ltd., and the expenses were reimbursed on actual basis without any service element. Citing a precedent judgment, the tribunal held that no service tax was payable on these reimbursements.

2. Issue 2 - Revenue's Appeal:
- The revenue appealed on the liability of service tax on Bundle Holding Charges and Sales Target Incentives.
- The tribunal noted that bottles and carets did not qualify as machinery, equipment, or appliances under the definition of SOTG, hence not subject to service tax.
- The charges imposed on distributors for holding bottles were not for providing a service but to encourage timely return for re-use. Therefore, the tribunal concluded that no service tax could be levied on these charges.
- Ultimately, the tribunal allowed the appeal filed by the appellant-assessee and dismissed the revenue's appeal, granting consequential benefits as per the law.

This judgment clarifies the non-applicability of service tax on certain transactions involving tangible goods and reimbursements, emphasizing the importance of possession and control in determining tax liability. It also highlights the distinction between charges for encouraging specific actions and charges for actual services rendered, providing a comprehensive analysis of the issues raised by both parties.

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