TaxTMI 
TaxTMI 
2020 (1) TMI 427
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..../alcoholic beverages in India. The appellant has entered into agreements with various independent bottlers who possesses the necessary licenses for manufacturing of alcoholic liquors. The bottlers retain certain fixed amount as bottling charges on which they are discharging their service tax liability and remaining amount was retained by the appellant i.e. the difference between the sale proceeds received by the bottler less the amount paid to bottlers. The appellant was of the view that the appellant is not providing any taxable service, therefore, no service tax was paid by the appellant. But, various representation made by the CBEC, seeking clarification with regard to the taxability of such transactions. The appellant registered with th....
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....ents between the owner of IMFL brand and the bottlers and clarified that under contract bottling arrangements, it is the bottlers who provides services to the brand owners. Therefore, the appellant is not liable to pay service tax. He further submits that as per Circular No. 332/17/2009 dated 30.10.2009, it was again clarified that the surplus/profit earned by the brand owner being in the nature of business profit and not chargeable to service tax. Therefore, the appellant is not liable to pay service tax. He relied on the decision of this Tribunal in the case of BDA Pvt. Ltd. vs. CCE 2015 (40) STR 352 (Tri.-Del.) which has been affirmed by the Hon'ble Apex Court reported in 2016 (42) STR J143 (S.C.). He also relied on the following decisio....
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....the brand owners (BOs) of alcoholic beverages get the products (Indian Made Foreign Liquor) manufactured on job work basis under a contract manufacturing arrangement with distilleries having facility to manufacture such beverages. In trade parlance, such job workers/distilleries are called as 'contract bottling units' (CBU). The aforesaid arrangement has come under tax net w.e.f. 01,.09.2009. 2. Under section 67 of the Finance Act, 1994, service tax is chargeable on the 'gross amount charged' by the service provider for providing taxable services. As per CIABC the gross value of sales, as per invoices, includes the following elements: 1) Bottling/job charges - paid to CBU 2) Distribution costs including fr....
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....exemption notification No.39/2009-ST is that there should be documentary proof specifically indicating the value of these inputs. Therefore, service tax on the value of raw materials and packaging materials would be exempt only when such charges are specifically mentioned in the invoice raised/documents maintained by the CBU. c) As regards the statutory levies, namely, excise duty /VAT, they do not present any 'consideration' for rendering the service. Whether such amount is paid by BO or by CBU, they have no nexus with the provision of service. As such, these levies will not be included for charging service tax. d) Similarly, the surplus/profit earned by the BO being in the nature of business profit (which falls withi....
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....e demand of service tax under the category of Franchisee Service as the same has been settled in the case of M/s Diageo India Pvt Ltd (supra). The relevant extract of this decision is reproduced herein below : "9. The terms of the agreement, CBUs to manufacture the products for and on behalf of the appellant at the plant of CBU using the appellant's equipment. The agreement clearly states that the CBU has no right to use the intellectual property of the appellant and there is no transfer of any IPR to the CBU from the appellant. The CBU has no claim whatsoever on the rights of the appellant. The nature of transaction between the appellant and CBU indicates that the appellant to use the brand on his own account and there is no repre....
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....ri Lanka and such services being in nature of Legal Services not liable to service tax prior to introduction of taxing entry of Legal Consultancy Services. Further, we find that prior to 18.04.2006, the appellants are not liable to pay service tax in reverse charge mechanism as held by the Hon'ble High Court in the case of Indian National Ship Owners Association (supra) which has been affirmed by Hon'ble Supreme Court in 2010 (17) STR A57 (SC) and CBEC vide Cir.No. F.Bo.276/8/209-CE 2A dt. 26.09.2011. Therefore, for the services received prior to 18.04.2006, the appellants are not liable to pay service tax. As the said issue of liability was settled by the Hon'ble High Court of Bombay in the case of Indian National Ship Owners Association (....