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ST - Appellant providing premises & manpower supply to conduct business - sum received not chargeable to ST under BAS - Prima facie activity is one of renting of immovable property - matter remanded: CESTAT

By TIOL News Service

MUMBAI, JAN 29, 2014: THE appellant entered into an agreement with M/s Amalgamated Bean Coffee Trading Co. Ltd., which envisages providing premises, infrastructure, electricity, water and manpower supply for the labour to conduct their business. As consideration for the services rendered, they were liable to get minimum guaranteed amount of Rs.47,000/- or 12% of the total monthly turnover, whichever is higher.

The department was of the view that the services provided by the appellant is classifiable under ‘Business Auxiliary Services' and accordingly confirmed a demand of Rs.61,800/-. The lower appellate authority directed the appellant to make a pre-deposit of Rs.30,000/- along with interest. Since the said direction was not complied with, the appeal was dismissed.

Hence, the appellant is before the CESTAT.

The Bench observed -

"3. We have gone through the agreement which is termed as Franchise Agreement. As per the agreement, the appellant has rented out their premises to M/s Amalgamated Bean Coffee Trading Co. Ltd. along with certain facilities, for which the appellant received the consideration. Prima facie the activity undertaken by the appellant is one of renting of immovable property and not Business Auxiliary Services. In view of the above, we are of the view that the matter has to go back to the lower appellate authority for reconsideration of the entire issue on merits without insisting on any pre-deposit."

In fine, the appeal was allowed by way of remand.

In passing : ST - Appellants are owners of properties and have allowed M/s ABCTCL to run café, making and selling coffee and other eatables under the brand name of ‘Café Coffee Day' - there is nothing on record to indicate that the appellants have performed any activity relating to promoting or marketing or sale of goods produced or provided by or belonging to client or for that matter any auxiliary service - Demand not sustainable under BAS - Appeals allowed: CESTAT [See 2013-TIOL-1880-CESTAT-MUM]

(See 2014-TIOL-147-CESTAT-MUM)


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