By TIOL News Service

MUMBAI, OCT 14, 2014: THE applicants are having an agreement with M/s New Kolkata International Development P. Ltd. (NKID) and the celebrity. As per the terms of the agreement, the applicant agreed to promote, endorse NKID products through the artist. The products which are to be promoted are residential and commercial complexes, luxury hotels, infrastructure projects, amusement park and setting up of educational institutes.

It is the view of the revenue that promoting these goods falls under Business Auxiliary Service as provided under 65(19) clause (i) of the Finance Act, 1994 and are liable for service tax.

Under this backdrop the CCE, Mumbai-II had no qualms in confirming the demand.

Before the CESTAT the applicant submitted that "goods" which were promoted by the artiste by way of agreement are not 'goods' as per FA, 1994; that section 65(50) provides that "goods" has the meaning as assigned to it in clause (7) of section 2 of the Sale of Goods Act, 1930; that as per the Sale of Goods Act, 1930, "goods" means every kind of movable property other than actionable claims and money. Inasmuch as since the "goods" which the department sought to tax is immovable property and are not goods as per section 2(7) of the Sale of Goods Act, 1930, they are not liable to pay service tax under the category of Business Auxiliary Service. It is further submitted that at the most service tax can be demanded from them under the category of 'Brand promotion' service which came into effect from 01.07.2010. Moreover, for a similar activity, a show-cause notice was issued to the artiste and the said proceeding has been dropped on the ground that the artist is providing Brand promotion service and not Business Auxiliary Service and, therefore, waiver of pre-deposit be granted.

The Bench observed -

++ Prima facie we are convinced with the argument of the counsel that the product in question are not 'goods' as per section 2(7) of the Sale of Goods Act, 1930. Therefore, the levy of service tax under the category of Business Auxiliary Service is not sustainable. In these circumstances, the applicant has made out a case for complete waiver of pre-deposit.

The CESTAT, therefore, waived the pre-deposit of the adjudged dues and granted a stay in the matter.

(See 2014-TIOL-1990-CESTAT-MUM)