ST - Promotion of brand - Matter referred to TM - ROM on ground that M(J) had not given findings on issue of export of service, therefore, there is a mistake apparent - since M(J) has given findings on merit, he is not required to address other issues - ROM dismissed: CESTAT
By TIOL News Service
MUMBAI, DEC 10, 2012: THE facts of the cases are that an intelligence was gathered by the officers of DGCEI that the appellants are engaged in brand promotion of 'INTEL' and 'MICROSOFT' for which commercial considerations were being paid by both the brand owners periodically. Therefore, it appeared that the services provided by the appellants are taxable under 'Business Auxiliary Service' as per Finance Act, 1994 effective from 01.07.2003. It was found that the appellants were not discharging their service tax liability on the commercial considerations received by them from the two brand owners. Therefore, show-cause notices were issued dated 11.04.2007 for the period 01.07.2003 to 28.02.2007 in the case of M/s Zenith Computers Ltd. and dated 30.03.2007 for the period 01.07.2003 to 31.08.2006 in the case of M/s Datamini Technologies (India) Ltd. The matters were adjudicated, demands of service tax along with interest and various penalties were confirmed against the appellants under the category of 'Business Auxiliary Service' by different order-in-originals viz. Order-in-Original No. 33/BR-28/ST/TH-I/2009 dated 30.09.2009 and 32/BR-29/ST/Th-I/2009 dated 7.10.2009 respectively passed by the Commissioner of Central Excise, Thane I.
Incidentally, when the Stay petition of M/s Zenith Computers Ltd. was heard by the Division Bench, the Member(Judicial) [writing for the Bench] while waiving the pre-deposit of the ST confirmed of Rs.67,80,664/- along with interest and penalties and granting Stay observed thus [See 2011-TIOL-1112-CESTAT-MUM] -
"4. We have carefully considered the submissions made by both the sides and found that the learned Jt. CDR has disputed that it is not a case of promotion of brand name but it is a case of promotion of branded goods. Therefore, we have perused the show-cause notice and on perusal of the show-cause notice, it is found that in paragraph 15.1 the allegation against the applicants is that why the services rendered by them to INTEL & MICROSOFT, viz. promotion of INTEL INSIDE and MICROSOFT technologies, should not be treated as taxable services under the category of 'Business Auxiliary Services' as per the definition provided under section 65(105)(zzb) of the Finance Act, 2003, as amended from time to time.
5. From perusal of the show-cause notice, it is clear that the allegation against the applicants is promotion of brand name and not the promotion of branded goods. Therefore, the said activity has come into taxable net w.e.f 01.07.2010 and the same has been considered by this Tribunal in the case of Jetlite (India) Ltd. (supra), wherein this Tribunal has held that promoting the brand name does not fall under the category of 'Business Auxiliary Services'. Therefore, we find that the appellant have made out a strong prima facie case for complete waiver of pre-deposit of Service Tax, interest and penalty. Accordingly, the same is waived and recovery thereof is stayed during pendency of the appeal."
However, when the matter was heard finally, the Division Bench had a new Member (Technical) and the appeal of another appellant M/s Datamini Technologies (India) Ltd . against whom a similar case was booked, as mentioned, was also heard and an order was passed.
Four months ago we had reported that decision (2012-TIOL-1349-CESTAT-MUM) wherein the Bench referred the matter to the Third Member as there was a difference of opinion inasmuch as whereas the Member(T) concluded that it is promotion of branded goods hence taxable under BAS, the Member(J) held that it is promotion of 'brand' and not taxable in view of decision in Jetlite (India) Ltd (2010-TIOL-1715-CESTAT-DEL).
Be that as it may, against that order of referring the matter to the Third Member, the appellant M/s Zenith Computers Ltd. has filed an application for Rectification of Mistake in the order 20.06.2012.
It is submitted that the Member (J) had allowed the appeal of the appellant holding that the demands are not sustainable under the category of ‘Business Auxiliary Services' therefore, they are not liable to pay the service tax, interest as well as the penalties. It is further submitted that the Member (Technical) has disagreed with the view taken by the Member (Judicial) and, therefore, held that the appellant are liable to pay service tax under the category of ‘Business Auxiliary Service' and also considered the issue relating to export of service, limitation and penalty.
It is further submitted that as the Member (Judicial) had not given his findings on the issue of export of service and limitation, therefore, there is a mistake apparent on the records; that the facts of the applicant's case are different from the facts of M/s Datamini Technologies (India) Ltd. in Appeal no. ST/07/2010.
Inasmuch as it is submitted that their application for Rectification of Mistake be considered and after considering the application for ROM, the matter be reheard. Reliance is placed on the judgment of the Bombay High Court in the case of Suzlon Infrastructure Ltd. (2009-TIOL-327-HC-MUM-ST).
The Member (Judicial) writing for the Bench observed -
“4. In the case of Suzlon Infrastructure Ltd. 2009(243)ELT 497(Bom.). (2009-TIOL-327-HC-MUM-ST), the issue before the Hon'ble High Court of Bombay was that when the matter has been referred to the third Member, whether the application for rectification of mistake is maintainable or not. However, in that case the Hon'ble High Court has observed that although there is difference of opinion between the members, the application for ROM is maintainable.
4.1. There was an order passed on 20.06.2012 wherein the Member (J) has given his findings on merit that the applicant is not liable to pay service tax under the Business Auxiliary Service as alleged, therefore, he has not gone into other issues raised by the learned Counsel for the applicant. On the other hand, the Member (Technical) while having a difference of opinion with the Member (Judicial) had considered other aspects also. As Member (Judicial) given his findings on merit, therefore, it is not require giving finding on other issues by the Member (J).
5. In these circumstances, we do not find any mistake apparent in the Tribunal's order dated 26.06.2012 while arriving at decision by both the members independently. Reliance placed by the learned Advocate on the decision of Suzlon Infrastructure Ltd. (supra) wherein the Hon'ble High Court hold that the application for ROM is maintainable but in that case, both the Members had not given finding on some issues but in this case Member (Judicial) allowed the appeal on merit and Member (Technical) dealt with all the issues. Therefore, the decision of Suzlon Infrastructure Ltd. (supra) is not applicable to the facts of this case.”
In fine, the application for ROM was dismissed.
Next...the Bombay High Court.
(See 2012-TIOL-1814-CESTAT-MUM )
