TaxTMI 
TaxTMI 
2014 (7) TMI 974
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....ion to obtain higher returns on their investments in their country liquor plant by increasing the sale of country liquor of "Pahili Dhar" brand. The copy of the said agreement, is annexed in paper book. The said agreement was replaced by another 'selling agency agreement' dated 01.01.2006 which is valid for a period of five years i.e. up to 31.12.2011. The copy of the said agreement is annexed in paper-book. As per the said agreements, the packing material, essence, etc. (required for manufacture/packing of the country liquor bearing "Pahili Dhar" brand of the Appellants) was to be supplied by M/s Talreja Trade (HUF) and M/s Talreja Trade (HUF) was supposed to collect the sale proceeds from the customers (to whom the country liquor of "Pahili Dhar" brand is sold by the Appellants (as suggested by him) and after deducting the price of the packing material, essence, etc. (supplied by him to the Appellants) from the said sale proceeds, the remaining sale proceeds were to be handed over by him to the Appellants. Accordingly, during the period 2004 to 2007 the Appellants manufactured country liquor of "Pahili Dhar" brand (out of their own raw material /packing material) and have sol....
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....and towards 'Business Auxiliary Services' was dropped but the demand of Rs. 38,39,187/- under the category of Intellectual Property Service' was confirmed along with equal amount of penalty under Section 78 and under Section 76 @ Rs. 200/- per day. Finding was recorded that M/s Talreja Trade pays, the 'minimum guaranteed margin' for sale of 50,000 bottles to the appellant. As per statement of Chief Accountant of the appellant this amount is 'royalty' for the use of brand name. During the personal hearing the appellant had submitted that the brand name "Pahili Dhar" as well as right to use the same remains entirely with it. Further the agreement clearly mentions that M/s Talreja Trade will not be entitled to the use of the brand name in any way. But the adjudicating authority referring to the agreement observed that only ownership of the brand name will rest with the appellant and M/s Talreja Trade is only utilizing the brand name for selling the 'country liquor' and paying royalty to the appellant. Further as the appellant stated it had no knowledge of its liability of the service tax of IPR service under the given facts, hence it was concluded that the appellan....
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.... appellants allowed M/s Talreja Trade (HUF) to use the brand name "Pahili Dhar" (owned by the appellants) to sell the country liquor only if the country liquor would have been owned/manufactured by M/s Talreja Trade (HUF). However, it is not the case of the department, in fact in para 26 of show-cause cum demand notice itself it is clearly admitted that the country liquor (in respect of which the brand name "Pahili Dhar" is used) is manufactured and owned by the appellants. 6.5 The appellants manufactured country liquor out of their own raw material/ packing material under their own brand name and have sold the said branded country liquor to various customers suggested by M/s Talreja Trade (HUF) and have received the sale proceeds through M/s Talreja Trade (HUF). M/s Talreja Trade (HUF), before handing over the sale proceeds, has only deducted the price of packing material, etc, sold by him to the appellants and have handed over the remaining sale proceeds to the appellants. 6.6 The appellants submit that on harmonious reading of the agreements and the documents on record will reveal that the appellants are manufacturing their branded country liquor (out of their own raw mate....
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....indings in the impugned order and prays for confirmation. 8.1 We have considered the rival contentions and perused the documents on record. 8.2 For the packing material and essence supplied by M/s Talreja Trade to appellant, proper sale invoices have been issued charging Sales Tax/VAT as applicable. Appellant have also directly purchased packing material and essence from others. 8.3 For sale of 'country of liquor' by appellant, proper sale invoices have been issued. In the said sale invoices the name of M/s Talreja Trade (HUF)' is shown as 'selling agent'. 8.4 The sale of 'country liquor' have been declared in the returns filed with the Sales Tax Department by the appellant. 8.5 A query was raised by Revenue vide letter dated 07.04.2006 to appellant for (i) if it was engaged in manufacture of liquor on job basis or under its own brand name & (ii) if manufacturing under own brand name, it any Commission Agent / C & F Agent have been appointed. In its reply dated 28.04.2006 the appellant said that they have 'selling agent' and enclosed copy of the agreement. 8.6 Copy of licence issued by the State Excise Authority as well approval of labels (to b....
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....ke country liquor. (ii) Purchase essences and use as per directions of agent. (iii) Fix selling price of country liquor in consultation with M/s Talreja Trade. (iv) To deliver the finished goods to M/s Talreja Trade or its nominees after ensuing compliance with State Excise Law. B) Of M/s Talreja Trade (Agent) (i) Responsible to purchase or sell entire country liquor produced by appellant. (ii) To collect sale proceeds (iii) Ensure timely deposit of duties and taxes. (iv) Responsible for compliance of statutory regulations under Bombay Prohibition Act' and 'Maharashtra Country Liquor Rules'. (v) To keep interest free Security Deposit of Rs. 10 lakhs with appellant and also deposit a duly signed cheque for Rs. 25 lakhs (vi) To direct appellant on matters of production and bottling of C.L. (vii) To assist appellant in procuring raw materials for ensuring constant production. (viii) To supply packing materials including bottles on cost ....
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....000 cases (earlier 50,000 cases) per month. b) For 60,000 to 75,000 cases i.e. for 15,000 cases additional sale Rs. 17.00 per case c) For 75,000 to 1,00,000 cases i.e. for additional 25,000 cases sale Rs. 16.00 per case d) The rates of premium country liquor brands to be decided after discussions. (to be evaluated on regular basis with K.S.S.K. and Agent by mutually agreement.) Amount is subject to annual review and revision. h) Cost incurred by the Agent for supplying any raw materials or executing any of it's responsibilities under this Agreement, including in promotional schemes for marketing country liquor This shall in no way change or affect the aforesaid payments to Krishna i) Responsibility and liabilities, if any, arising from losses in excess of those allowable in production of spirit and country liquor and shortages in production process, breakages in supplies. This shall be exclusively borne by the Agent j) In the event, the Agent fails to sell 60,000 minimum cases of country liquor The Agent is liable to pay to Krishna Rs. 10.80 lakhs (Rupees Ten lakhs eighty thousand only) towards the guaranteed minimum margin which has been ....