service tax on other income

[MUKUND THAKKAR]

Sir,

owner of resturant have recevied the letter from service tax dept. that service tax is pay against the income shown in balance sheet of year 2013-14 Rs, 20 lkhs under head of ' OTHER INCOME' , In fact other income is pertaining to sales promotion.

In the year 2013-14 resturant owner's sell the food coupen to their future customer,

As and when customer coming for meal they have used this food coupen and getting the items ' order one items and get one ordered item free' exempale ordered one soup and one free.

please clerify following..

1.Service tax is applicable on ' other Income' which has pertaining to sales promotion, books of account is clearly mention income agianst sales promotion.

[KASTURI SETHI]

SH.MUKUND THAKKAR Ji,

Sir, As per the facts of the case, I am of the view that no element of service is involved. Only sale of food by way of coupon is involved. Hence no ST applicable. However, as per the books of account, sale of food has been caused and promoted by way of coupon. The term, "Sales Promotion" should not have been used in the the books of accounts.This has caused the problem. Now the department wants to include the value of sales promotion in the gross amount charged under Section 67 for the purpose of recovery of ST. The activity of sales promotion is a service in terms of Board's Instruction F. No. 96/85/2015-CX.I, dated 7-12-2015.(Point No.B 30).

Now the assessee has to prove that no service was involved and only sale of food was involved. Otherwise there is no escape route.

[MUKUND THAKKAR]

Dear Kasturi Sethi Sir,

Thank you very much for your valuable inputs. This all happens in the year 2013-14. and circular come in to force of 07.02.2015. so it is applicable. i am sure that your punch line Only sale of food by way of coupon is involved. Hence no ST applicable. will be becoming game chang. sir if any case law is there please suggest.

Once again Thanks.

[KASTURI SETHI]

SH.MUKUND THAKKAR JI,

Sir, You will get case laws by tomorrow. Had the assessee given the accounting Head, "Sale Through Coupon", he would not have invited SCN. Anyhow now the assessee will get natural justice through litigation, as there is no other option left.

[KASTURI SETHI]

SH.MUKUND THAKKAR JI,

Sir, Otherwise also 'sales promotion' is covered under the definition of 'input service' and classified under the erstwhile BAS (Now under Other Than Negative List). Citation of case laws are as under:-

1. 2008 (9) S.T.R. 337 (S.C.) = 2008 (1) TMI 2 - SUPREME COURT OF INDIA IMAGIC CREATIVE PVT. LTD. Vs. COMMISSIONER OF COMMERCIAL TAXES

2. 2014 (36) S.T.R. 1205 (Ker.) = 2014 (11) TMI 393 - KERALA HIGH COURT HIGH COURT OF KERALA UNION OF INDIA Vs. KERALA BAR HOTELS ASSOCIATION.

If Any other case law or information is required. You are welcome, Sir.

[KASTURI SETHI]

SH.MUKUND THAKKAR JI, Just for sharing and information of the visitors of this site

Sir, It is seen that most of small service providers prefer to hire an accountant instead of consultant in order to save money and such people pay a heavy price. At least any assessee can seek guidance from experts on TMI which is free of cost.There is proverb, "Everybody is wise after the event." In case any assessee neither seeks advice from the experts on TMI nor engages consultant, that is in the interest of consultants.

Two months ago a well educated assessee came to me but only after the damage was done. He had to bear loss of ₹ 25 lakhs because of lack of knowledge of abatement.

Still there are so many assessees and professionals who do not know about this free facility of TMI.

[KASTURI SETHI]

SH.MUKUND THAKKAR JI,

This situation reminds me of a famous dialogue of Shakespeare's drama, "Romeo & Juliet". That is "What's in name ? If rose is called by another name, will it not give the sweet smell of rose ?" Sale will remain sale and will not become service by changing its nomenclature.

[MUKUND THAKKAR]

Dear Kasturi Sethi Sir,

Once again and again Thank you very much sir, your guide lines and support enhance our knwoledge. if any more clearity I need will come back to you..

Have a nice weekend

AI Summary

Sales promotion as service may attract service tax unless promoter proves transactions were pure sales via coupons. The department asserts that amounts recorded as 'Sales Promotion' arising from food coupons must be included in the gross amount charged because sales promotion is classifiable as a service under the Board's instruction; the assessee must prove that only sale of food occurred and no service element existed or face service tax recovery.