By TIOL News Service

NEW DELHI, FEB 12, 2017: THE dispute is relating to the appellant's liability to pay service tax with reference to their activity of promoting sale of "Koutons” brand of readymade garments supplied by M/s. Charley Creations Pvt. Ltd., the owner of said brand.

The department entertained a view that the appellants are not eligible for exemption under notification 6/2005-ST as they have been rendering service of business promotion and marketing of "branded” products.

The original authority dropped the demand but in revisionary proceedings the demand was upheld by the CCE, Raipur .

The Revision Authority simply recorded that the appellant received value of service for promotion, marketing and sales of branded product acting as commission agent. He relied on the fact that huge advertisement boards were displayed by the appellant for the branded garments and also appellant advertised in newspapers and periodicals with the address and location of their shop displaying the brand name of the garments. And that, all this makes the service provided as branded service, is the conclusion of the revisionary authority.

The appellant is contesting this order on the ground that the original authority properly examined the scope of service and concluded that selling branded goods cannot be considered as providing service with brand name of another person .

The CESTAT viewed that the original authority had correctly examined the issue involved and the Bench was in agreement with the same.

After extracting the following findings of the original authority-

"8. It is clear from the above that the services provided under a brand name of other persons are not eligible for the exemption under the aforesaid Notification. The show cause notice alleges that the Noticee are using the brand name "KOUTONS” owned by other, for providing the service, whereas the Noticee are contesting this. As stated earlier "KOUTONS” is brand name of goods that are sold in the sales outlet being operated by the Noticee for the client. I am unable to accept that this tantamounts to the use of brand name for provision of service by the Noticee to the client. The mere fact that a certain brand of goods are being sold through sales outlet of the service providers, would not automatically conclude that the said brand is used for providing business auxiliary services to the client by the service provider. Such a suggestion with reference to many service like cargo handling, C&F, Business Auxiliary, GTA etc. would make all such service providers out of the purview of Notifn. 6/2005-ST, as all of them handle goods bearing the brands of other, which certainly is not the intent of the legislature.

9. Coming to the facts of the instant case, I find that the Noticee have only handled the goods bearing the brand name of the client in the course of providing the business auxiliary services to the client and except this there has been no other evidence to substantiate the charges of the show cause notice. There is no evidence whatsoever to indicate that the Noticeeare providing the business auxiliary service under any brand name owned by other. I find substantial force in the defence arguments of this account. The contention that when the service recipient is the owner of brand name than how can the Noticee use the same brand name for providing service to the owner of the brand, also deserves acceptance on merits."

the CESTAT set aside the impugned order and allowed the appeal.

(See 2017-TIOL-396-CESTAT-DEL)