TaxTMI 
TaxTMI 
2015 (4) TMI 252
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty issued a common (impugned) order. 2. In respect of first Show Cause Notice confirming demand of Rs. 60,11,37,341/- the computation is summarised in para - 5 of the impugned order, which is reproduced below:- Expenditure in Foreign Currency shown by M/s. Coca Cola India Pvt. Ltd. In their Balance Sheets Head/ Year 2005-06 2006-07 2007-08 2008-09 2009-10 Total Travelling Expenses 11,69,695 21,97,255 29,43,002 16,71,321 32,37,944 Advertising and Marketing Expenses 25,01,949 1,47,74,017 1,14,49,235 1,74,25,004 94,94,137 Total 36,71,644 1,69,71,272 1,43,92,237 1,90,96,325 1,27,32,081 6,68,63,559 Rate of S. Tax 10.20% 12.24% 12.36% 12.36% 10.30% Amount of S.Tax payable 3,74,508 20,77,284 17,78,880 23,60,306 13,11,404 79,02,382 Income Shown by Coca-Cola India Pvt. Ltd. In their Balance Sheets Head/ Year 2005-06 2006-07 2007-08 2008-09 2009-10 Remarks / Total Marketing Support (including Marketing, Support, Advertising and Sales 16,61,713,559 59,93,85,763 65,52,43,068 90,20,73,6....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncy then under Section 66A of the Service Tax Law, the company is liable to pay service tax on such foreign currency payments made to foreign service providers. In this case as no service is provided by the foreign service providers, no service tax is applicable under Section 66A. Hence the demand made on travelling expenses is unsustainable." The adjudicating authority then discussed this issue in para 67 of 'Discussion and Findings' portion of the order, which is reproduced below:- "FOREIGN CURRENCY PAYMENTS:- TRAVELLING EXPENSES 67. M/s. CCIPL vide their submissions interalia submitted in respect of the said service that with regard to travelling expenses, we submit that it has been undertaken for business purposes. If such travels are undertaken for business purposes then no service tax will get attracted as there is no service provider in such cases. However no reason has been given for levy of service tax on travelling expenses. We submit that under the reverse charge method in case of foreign service payments only when the company avails some service from a foreign service provider and pays for such service in foreign currency then under Section 66A of the S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ble on such advertising and reverse charging expenses, we have paid the tax under reverse charge method. We crave leave to produce documents in this regard for which 30 days' time may be granted to us. Further we submit in terms of Section 70 of the Act that, there is no failure on our part to furnish a return or to pay the tax as provided in the Act as there is no obligation or liability on our part to submit any such return or pay tax in respect of the above activities. Further the Department is erroneously calling upon us to register ourselves under "Renting of Immovable property Act" and under "Supply of Tangible Goods for use in India" and under "Business Auxiliary Services" whereas in all the above cases quoted in the SCN we have paid money to the Indian residents in respect of property taken on rent by us, vehicles taken on rent by us and on cost of expenses paid by us to third parties. In these cases, the best that can be alleged against us is that we are only a service recipient and not a service provider. Hence calling us to register in respect of the above services, even though we are a service recipient, is contrary to the provisions law and hence unsustainabl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....6.08.02 when it read as under- 2(1) In these rules, unless the context otherwise requires,- (d) person liable for paying the service tax means, (iv) "in relation to any taxable service provided by a person who is a non-resident or is from outside India, does not have any office in India, the person receiving taxable service in India"; 73. This Rule 2(1)(d)(iv) was amended by the Service Tax (Fifth Amendment) Rules, 2005 under Notification No.23/2005-ST dt.7.6.05, w.e.f. 16.6.05 when it read as under: 2(1) in these rules, unless context otherwise requires, (d) person liable for paying the service tax means, (iv) "in relation to any taxable service provided or to be provided by a person, who has established a business or has a fixed establishment from which the service is provided or to be provided, or has his permanent address or usual place of residence, in a country other than India, and such service provider does not have any office in India, the person who receives such service and has his place of business, fixed establishment, permanent address or, as the case may be, usual place of residence, in India;" 74. This Rule 2(1)(d)(iv) was further amended by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce in India. ii) in case of taxable service received outside India by a person, who is a resident in India or has a place of business/ establishment in India, the service tax liability arises w.e.f. 18.04.06, on reverse charge basis on the recipient of service in India. 77. In terms of Section 67 of the Act, the taxable value for the purpose of payment of service tax shall be gross amount charged/paid for the taxable service and shall include any amount received/paid towards the taxable service before during and after provision of such service. 78. In order to safeguard the revenue I find that Section 72 appears to be invokable. Section 72 of the Act provides the provisions of best judgement, which stipulates that where an assessee; (c) fails to furnish the return under section 70; d) having made a return, fails to assess the tax in accordance with the provisions of this Chapter or rules made there under, the Central excise Officer, may require the person to produce such accounts, documents or other evidence as he may deem necessary and after taking into all the relevant material which is available or which he has gathered shall by an order in writing, after giving t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....- "39. The issues before me are discussed one by one:- Marketing support (including marketing support, advertising and sales promotion) M/s. CCIPL vide their submissions interalia submitted in respect of the said service that in the second part of the statement column 1 relates to Marketing support (including marketing support, advertising and sales promotion). This figure has been taken from the schedule to the Balance Sheet for the previous year which is appearing under the heading "Transactions with related parties". This is erroneously treated as income of the company in the previous year whereas this relates to an expense of the company. The same error has been committed by the Department in this year also. 40. In this connection we wish to state that Coca-Cola India Pvt. Ltd. is a manufacturer of concentrates. It sells the concentrates to various bottlers within India. The bottlers purchase the concentrates, which is the essential ingredient for the manufacture of beverages. The bottlers sell their final products beverages in their respective territories. As a common practice in any industry, to increase the sale of their final products viz., beverages, the bottle....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tice proceeds on an erroneous assumption that in the instant case we have rendered "Business Auxiliary Services" by providing the service of promotion or sale of goods on behalf of the client. There is a basic error in issuing the above SCN for the following reasons: CCIPL has not rendered any service to or charged any fees from any bottler in India in respect of such Marketing, Advertising and Sates Promotions. There is no receipt of money CCIPL and it is only an expense in the hands of the company. Hence no service tax can be levied in the hands of CCIPL The amounts have been taken from the schedules to the Balance sheets which discloses "transactions between related parties". This does not automatically mean that CCIPL has received the money. It only simply states that CCIPL and HCCBPL are related parties in respect of that transaction. CCIPL has no relationship of a service provider and client viz., the bottlers in India to whom the amounts wee paid. 46. The transaction does not fall under the ambit of "Business Auxiliary Service" as there is no service involved. The bottlers purchase concentrate from Coca-Cola India Pvt. Ltd., and use it in the manufacture of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wards sale of concentrate and not for any service. Further the purpose of corporate guarantees given by M/s. CCIPL and M/s. HCCBPL, the appellants submit that these guarantees have been given against the income tax demands by the ITAT. We find that the adjudicating authority does not controvert these submissions in any manner and simply moves on. 7. Regarding the component of demand under the category "Service Provided" the appellants' submissions are recorded in para 54 (of the impugned order) which is reproduced as under:- "54. M/s. CCIPL vide their submissions interalia submitted in respect of the said service that this is in respect of export of services provided by CCIPL to International Auditors Inc., USA (hereinafter referred to as "IAI"). IAI is a company incorporated under the taws of USA and situated at Atlanta, Georgia in United States of America. CCIPL has been engaged by IAI vide an agreement dated 14th May, 2009 to conduct corporate audits of various international subsidiaries of The Coca-Cola Company, USA. These international subsidiaries are situated in various foreign countries as well as in India. The order for these services is placed by IAI and the mon....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion or up gradation of any working system of any organization.' And whereas the definition of management consultant w.e.f. 1.5.06 reads as follows: "Management consultant means any person who is engaged in providing any service, either directly or indirectly, in connection with the management of any organization in any manner and includes any person who renders any advice, consultancy or technical assistance in relation to financial management, human resources management, marketing management, production management, logistics management, procurement and management of information technology or resources or other similar areas of management." And whereas, subsection 65(90)(r) of the Act, as on 01.10.02 reads as under: 'Taxable service means any service provided to a client, by a management consultant in connection with the management of any organization, in any manner:' And whereas, subsection 65(105)(r) of the Act, w.e.f. 16.06.05 as amended reads as under; 'Taxable service mans any service provided to a client, by a management consultant in connection with the management of any organization, in any manner;' " It is evident that paras 55 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Service" and thereafter simply moved on to the next component of demand namely "Income from Lease Vehicles" without even a whisper of any analysis and finding about the sustainability of this component of demand relating to what is called "Income from Lease of Property". This is nothing but a cavalier and careless attitude on full display. The appellants actually showed with reference to their profit and loss account that these were their expenses, which were incurred on leasing the immovable property for their use. Thus they were the recipient of the said service and therefore the question of they being liable to pay service tax is preposterous; it not being a case of import of service inviting reverse charge mechanism. 8. Similarly, with regard to the component of the impugned demand under "Income from Lease of Vehicles", the appellants made the following submissions as duly recorded in paras 65 & 66 (in the "Discussions and Finding" portion of the adjudication order), which are reproduced below:- "65. M/s. CCIPL vide their submissions interalia submitted in respect of the said service that similarly, again in this case the Department has erred in treating this as an incom....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the proviso to Section 11A(1) of the Central Excise and Salt Act, 1944 had been committed by assessee and adjudicating authority must specifically deal with assessee's contention in rebuttal thereof. Seen in the light of the Supreme Court rulings in this regard, the adjudicating authority has obviously failed to meet even the minimum requirements necessary to sustain the invocability of the extended period. 10. Para 78 of the impugned order is the only para dealing with the resort to best judgement method. This para is again reproduced below:- "78. in order to safeguard the revenue I find that Section 72 appears to be invokable. Section 72 of the Act provides the provisions of best judgement, which stipulates that where an assessee; (c) fails to furnish the return under section 70; d) having made a return, fails to assess the tax in accordance with the provisions of this Chapter or rules made there under, the Central excise Officer, may require the person to produce such accounts, documents or other evidence as he may deem necessary and after taking into all the relevant material which is available or which he has gathered shall by an order in writing, after g....