TaxTMI 
TaxTMI 
2019 (7) TMI 955
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....g with interest and penalty. On adjudication, the demand was confirmed with interest and penalty. Hence, the present appeal. 3. The learned Advocate Shri Anil Malani for the Appellant has submitted that by brewing agreement between the Appellant and M/s UBL dt.01.04.2005 and further amended by the agreement dt.02.03.2009, M/s UBL being owner of 'King Fisher' and 'London Pilsner Brands' permitted the Appellant to manufacture and sell the branded beer. Under the said agreement, UBL granted non-assignable, non-transferable and non-exhaustive rights to the Appellant to brew the beer under the brand owned by UBL. The Appellant had paid UBL all inclusive consideration of Rs. 5/- per case of beer for usage of brand names of UBL and UBL has discharged service tax liability on the said amount under Intellectual Property Right Services. The Appellant has undertaken manufacturing of beer on his own and sold the same to third party in the same manner it manufactured and sold beer under on its own brand name. The entire production bearing the brand name of UBL has been sold by the Appellant directly to the customers, distributors of UBL and also to UBL. Such sales are made under invoices raise....
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....r Vs UoI - 1981 (8) ELT 389 (Delhi), Rubicon Formulations Ltd Vs CCE & ST, Aurangabad - 2010 (19) SER TR 515, UOI Vs Cibatul Ltd - AIR 1986 SC 281, CIT Vs B.M. Kharwar - AIR 1969 SC 812, Hindu Shipyard Ltd Vs State of Andhra Pradesh - AIR 2000 SC 2411. 3.2 Learned Advocate has vehemently argued that in any transaction of service tax, there has to be a service provider who renders service and the service receiver of the said service. In the present case, service provider has been rendering service under IPR service in terms of Circular No.249/1/2006-CX-4, dt.27.04.2008. Since UBL has already provided service on its beer brands manufactured by the Appellant, on the same transaction again how Appellant could have provided service to UBL. It is his contention that Service tax cannot be calculated at both ends of the same transaction. Referring to Section 67 of the Finance Act, 1994, the learned Advocate has submitted that receipt of consideration is a pre-requisite for service tax levy; in the present case the consideration was for the goods supplied and not for the services rendered. The Appellant had not received any consideration from UBL for rendition of any service. Referring to ....
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....manufacture of goods, being purely a "manufacturing activity" service tax also cannot be levied for the period 01.09.2009 to 30.06.2012 as the period prior to it exempts applicability of service tax on manufacture. 3.4 Learned Advocate has further submitted that as per the scheme of amalgamation sanctioned by BIFR, the Appellant has merged in UBL w.e.f. 01.04.2010, hence there is no question of any liability of service tax after the said date. He has submitted that the amalgamation is done as per Section 17 (2) of Sick Industrial Companies (Miscellaneous Provisions) Act, 1987 and the said Act is having over-riding effect over all other laws for the time being in force. The scheme has attained finality under the said Act. In support, he has referred to the judgment on the issue viz. Marshal & Sons Vs Income Tax Officer - 1997 (2) SCC 302, CCE Trichy Vs IOC Ltd - 2011 (23) SER TR 625. 3.5 He has further contended that once applicable sales tax/VAT is paid on the transaction, service tax is not payable again in relation to the subject transaction. He has referred to the judgment in the case of Idea Mobile Communication - 2006 (4) STR 132 (T), Thermax Ltd Vs CCE Pune-I - 2007 (8) STR....
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....ights of brand name used by them for which they were paying Rs. 5/- per case, is not correct. On the contrary, every aspect of production as well as disposal was controlled by UBL which has been clearly spelt out in the adjudication order passed by the Commissioner. 4.2 Referring to the Notification NJo.39/2009-ST, dt.23.09.2009, the learned A.R. has submitted that valuation in this regard has been prescribed, which is equivalent to the cost of production less the value of the input, based on which the taxable value of the goods could be arrived at. However, the basic condition to apply the said notification is that the service provider should maintain separate account of receipt, production, inventory and dispatches of goods as well as the financial transaction between the alcoholic beverages manufactured on his own account and manufactured on behalf of another. In the present case, the Appellant has not complied any of the said condition. Further, he has submitted that reliance placed on the Circular of 2008 was erroneous, especially in view of Notification Nol.39/2009 which encompasses various charges liable for arriving at the valuation of the goods. 4.3 Further, rebutting th....
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....ver the GVAT Act. 4.5 The learned A.R. has further submitted that it is relevant to keep in mind that in applying the ratio of the judgment, the Hon'ble Courts have held that the precedent is valid for what it actually decides. In support, he has referred to the judgment in the case of Ambica Quarry Works & Anr. Vs State of Gujarat & Ors. - 1987 SCR (1) 562, CCE Mumbai Vs Fiat India Pvt. Ltd - 2012 (283) ELT 161 (SC). 4.6 On the issue of limitation, the learned A.R. has submitted that neither copy of the contract was declared to the Department nor the transactions had been mentioned in the ST-3 returns filed by the Appellant. As there was no declaration at any stage to the Department about the said activity pursuant to the brewing agreement, therefore, the Appellant has suppressed the material facts, hence, the demand is rightly confirmed invoking extended period of limitation. 5. Heard both sides at length and perused the records. 6. The issues involved in the present appeal for determination are whether: (i) the Appellants, who manufactured beer, affixed with the Brand name of M/s United Breweries Ltd. and sold under their instruction as per Bottling/Brewing agreement dt.01....
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.... in Sec.65(19) of the said Act prior to and after 01.09.2009. Before 01.9.2009 [(19) "business auxiliary service" means any service in relation to, - (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client; or [ * * * * ] (iii) any customer care service provided on behalf of the client; or (iv) procurement of goods or services, which are inputs for the client; or [Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, "inputs" means all goods or services intended for use by the client;] [(v) production or processing of goods for, or on behalf of, the client;] (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, [but does not in....
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....ration, and includes any person who, while acting on behalf of another person - (i) deals with goods or services or documents of title to such goods or services; or (ii) collects payment of sale price of such goods or services; or (iii) guarantees for collection or payment for such goods or services; or (iv) undertakes any activities relating to such sale or purchase of such goods or services; [(b) "excisable goods" has the meaning assigned to it in clause (d) of section 2 of the Central Excise Act, 1944 (1 of 1944); (c) "manufacture" has the meaning assigned to it in clause (f) of section 2 of the Central 11. The change that has been brought into the definition of the BAS w.e.f. 01.9.2009 is the nerve chord of dispute. In the previous definition the exclusion clause was expressed as: "[but does not include any information technology service and any activity that amounts to "manufacture" within the meaning of clause (f) of Section 2 of the Central Excise Act,1944." 12. The amendment to the said clause reads as: ", [but does not include any activity that amounts to manufacture of excisable goods. 13. And the meaning of "manufacture" and "excisable goods" mentione....
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.... introduced the Finance (No. 2) Bill, 2009 in the Lok Sabha on the 6th of July, 2009. Clause 112 of the Finance (No. 2) Bill, 2009 covers all the changes relating to Chapter V of Finance Act, 1994. Changes are also being proposed in the provisions of the, xxxxxx 3. Alteration in the scope of existing taxable services : The following alteration/modifications have been done in the existing taxable services. These changes would come into effect from a date to be notified after the enactment of the Finance (No. 2) Bill, 2009. 3.1 Modification in Business Auxiliary Service (BAS) [section 65(19)] :- It may be recalled that production or processing of goods for or on behalf of a client falls within the purview of this service. However, if any such activity amounts to manufacture within the meaning of section 2(f) of the Central Excise Act, the same is excluded from its purview. This exclusion has been modified to state that it would apply only if the activity results in manufacture of 'excisable goods'. Both the words/phrases i.e. 'manufacture' and 'excisable goods' would have the same meaning as defined under the Central Excise Act. The impact of this change would be that even if....
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....mine the said contention, it is quite essential to analyze the arrangement/agreement between the Appellant and M/s SKOL through the agreement dt.01.4.2005. In the recital of Agreement the intention and purpose behind such agreement has been spelt out in clear terms; it is M/s UBL who was on the lookout for reliable brewer for manufacturing and bottling beer in various territories. Under Clause 5.9 of the agreement, it is made clear that the Appellant was manufacturing and disposing UBL's beer to State Beverages Corporation / State regulated Depots or to the wholesellers, indentors holding necessary permit licences under the relevant Excise law and who are authorized to purchase/sale. beer in terms of relevant regulation upon their placing purchase orders/indents on the brewer. Clause 6 which makes it clear that the manufacture is for and behalf M/s UBL reads as follows:- 6. Quantity 6.1 Brewer shall manufacture and dispose off 9,60,000 cases of beer per annum on behalf of UBL. 3,60,000 cases from Aurangabad Brewery and 6,00,000 cases from Dharuhera Brewery. Clause 9.4.5 which reads as follows: In the event of expiration or termination of this Agreement, BREWER shall immedia....
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....tions constituting buyer's standards and they were supplied at the prices agreed upon between the sellers and the buyers from time to time. The buyer was entitled to test a sample of each batch of these goods and it was only after approval by the buyers the goods were released for sale to the buyers. The buyer, who obtained trademarks from its foreign company, authorised the seller to affix the trade mark and the seller was to do so "as an agent" for and on behalf of the buyer and not on his own account. The Respondents M/s Cibatul Limited filed price list declaring the wholesale prices of the manufactured goods. The Assistant Collector revised the wholesale prices upward on the basis of wholesale prices at which the buyer sold the products in the market. The question before Hon'ble Supreme Court was whether the wholesale price of the goods at which it was sold by the seller to the buyer for assessment or the price at which the buyer sold the goods in wholesale in the market be adopted for the purpose of assessment. In these circumstances, the Hon'ble Supreme Court has held that the goods were manufactured by the seller M/s Cibatul Ltd. on his own account and not on behalf of t....
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.... marketing needs of M/s SKOL. Therefore, the ratio laid down in the aforesaid judgments cannot be made applicable to the present case. 27. It is the contention of the Appellant that in any service, consideration flows from the service receiver to the service provider, whereas in the present case, the appellants paid Rs. 5/- per case to M/s UBL, and M/s UBL paid service tax under the category of IPR service on the said amount, hence, it is not a service. At the first blush the argument sounds quite attractive but on deeper analysis will not sustain. The reason for not discharging service tax under Business Auxiliary Services as the amount paid by the Appellant to M/s UBL suffered service tax in the hands of M/s UBL cannot be a valid ground. It is the agreement/arrangement that determines the liability. The arrangement/agreement for manufacture and sale of branded alcoholic beverages between the appellant and M/s UBL is a complex one; even though the appellant is authorised to sale the manufactured branded beer in the local market, but the customers/indenters are as per the instruction of M/s UBL; the sale price is fixed by M/s UBL after mutual consultation. Thus it is not a simple ....
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...., 'capital goods' shall have the meaning as is assigned to them under rule 2 of the Cenvat Credit Rules, 2004. [Notification No. 39/2009-S.T., dated 23-9-2009] 28. Therefore, the value of the services needs to be determined keeping in mind the aforesaid notification and the principles of valuation prescribed under Section 67 of the Finance Act and the Valuation Rules, 2006. The Adjudicating authority has erred in adopting the sale price of the Appellant. 29. The next issue for determination is the date of amalgamation/ merger of the Appellant's unit with M/s United Breweries Ltd. In the scheme of arrangement as per the direction of BIFR for amalgamation of the Appellant's brewery division with M/s United Breweries Ltd., the appointed date and the effective date have been defined under Definition Clause 1.2 & 1.4 of the said scheme, respectively, as follows:- 1.2 "Appointed Date" means the 1st day of April 2010 or such other date as may be approved by the BIFR. 1.4 "Effective Date" means the date of filing of the certified copies of the BIFR Order with the Registrar of Companies, Bangalore. In Clause 2 of the said arrangement, it is mentioned as: 2. Date of Taking Effect an....
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....eme Court in Marshal & Sons Co. India Ltd.'s case(supra). Their Lordships at Para 14, observed as follows:- "14. Every scheme of amalgamation has to necessarily provide a date with effect from which the amalgamation/transfer shall take place. The scheme concerned herein does so provide viz. 1.1.1982. it is true that while sanctioning the scheme, it is open to the Court to modify the said date and prescribe such date of amalgamation/transfer as it thinks appropriate in the facts and circumstances of the case. If the Court so specifies a date, there is little doubt that such date would be the date of amalgamation/date of transfer. But where the Court does not prescribe any specific date but merely sanction sanctions the scheme prescribed to it - as has happened in this case - it should follow that the date of amalgamation/date of transfer is the date specified in the scheme as "the transfer date". It cannot be otherwise. It must be remembered that before applying to the Court under Section 391(1), a scheme has to be framed and such scheme has to contain a date of amalgamation/transfer. The proceedings before the Court may take some time; indeed, they are bound to take some time bec....
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....ion. 35. This Tribunal in the case of ITC Hotels Ltd.'s case (supra) was confronted with the question whether the amalgamation of M/s ITC Hotels Ltd and M/s Ansal Hotels Ltd with the parent company M/s ITC Ltd. was as on 01.04.2004, i.e. the appointed date as per the Amalgamation scheme duly approved by the Hon'ble High Courts or the effective date of amalgamation, when the application filed with Registrar of companies that is 23.03.2005. Following the judgment of Hon'ble Supreme Court in Marshall Sons & Co. Ltd.'s case, it is held that the date of amalgamation would be the 'appointed date' presented in the scheme. Further, the Tribunal has observed that even though the said judgment was delivered in the context of Income Tax law, but binding relating to the issues arising under Central Excise Act or under Chapter V of Finance Act, 1994.It is observed as: "10. The law declared by the Apex Court is binding and is required to be followed. The submission of the learned DR that the ratio of the above judgment given in the context of income tax would not be applicable to the facts of the present case as there is no specific provision to that effect under the Central Excise Act or und....
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....d Ansal Hotels Ltd. have to be considered as having been provided on behalf of the transferee company viz. ITC. Ltd., in which case, no service tax liability would arise against the service provider." 36. Subsequently, this Tribunal, in Usha International Ltd.'s case, have considered all the aforesaid three judgments. The facts leading to the issue before the Tribunal was that a refund claim of Rs. 84,76,586/- of service tax paid on royalty paid by the transferee company Usha International Ltd to M/s Joy Engineering Ltd, the transferor Company was filed on the basis of High Court's order dt.26.05.2008 approving the merger w.e.f. 01.04.2007 being the appointed date. This Tribunal, applying the principle laid down in Marshall Sons & Co. and that of Jindal Strips Ltd, held as follows:- "7. In the light of the foregoing binding precedents there remains no scope for any debate that the date of amalgamation in the present case is to be held to be 1-4-2007 and not 20-6-2008. Obvious consequence of this is that the service rendered during the impugned period (1-4-2007 to 31-3-2008) became service to self and consequently service tax paid during the said period became eligible for refund....
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....to the facts of the case on hand; more particularly, considering Section 52 of the GVAT Act. As observed hereinabove, neither Section 52 of the GVAT Act cannot be said to be an encroachment upon the powers of the Union Legislation, as envisaged under Section 246 of the Constitution nor the same can be said to be in conflict with the provisions of the Companies Act, 1956. Therefore, the decision of Hon'ble Supreme Court in the case of State of West Bengal & Ors Vs Committee for Protection of Democratic Rights, West Bengal & Ors. (supra) as well as UCO Bank & Ors. Vs Dipak Debbarma & Ors. (supra) relied upon by the learned Counsel for the petitioners shall not be of any assistance to the petitioners. As observed hereinabove, both the Acts operate in different fields and with respect to different eventualities. Therefore, considering the pith and substance of Section 52 of the GVAT Act, it cannot be said to be in conflict with the Union Legislation." 39. Consequently, upholding the constitutional vires Section 62 of GVAT Act, 2003, their Lordships observed as follows:- "28. In view of the above and for the reasons afore stated, it is held that Section 52 of the Gujarat Value Added ....