CCE, CHANDIGARH Vs. M/S. PREMIER MOTOR GARAGE

JUDGEMENT

(1.) THE respondent are an authorized service station for which they have service tax registration. During the period from 01/7/03 to 31/3/05 they received certain amount from M/s. Hindustan Motors for organizing advertisements and road shows for the purpose of promoting the sale of the cars being manufactured by M/s. Hindustan Motors and expenses incurred in this regard were shared equally by the respondent and M/s. Hindustan Motors. In respect of the share of the expenses payable by M/s. Hindustan Motors, the respondent issued credit notes to them. The department was of the view that the respondent have provided Business Auxiliary Service of promotion or marketing or sale of the goods produced by M/s. Hindustan Motors to them and, hence, on the amount being received by them from M/s. Hindustan Motors, they would be liable to pay the service tax under Business Auxiliary Service. After issue of show cause notice, the Jurisdictional Additional Commissioner vide order -in -original dated 19/2/07 confirmed the service tax demand of Rs. 6,86,972/ - on this count alongwith service tax demands in respect of some other services, alongwith interest on this amount. On appeal being filed to Commissioner (Appeals), he vide impugned order dated 03/4/08 set aside the above -mentioned service tax demand on the ground that the respondent had received only reimbursement of the expenses on advertisement and road show being organized by them and, as such, there is no relationship of principal and client between them. Against this order of the Commissioner (Appeals), this appeal has been filed. Today, when this matter was called for hearing, none representing the respondent appeared, though a notice had been issued to them well in time. In view of this, so far as the respondent are concerned, the matter is being decided ex -parte, in accordance with Rule 21 of CESTAT Procedure Rules, the matter is being decided ex -parte.

(2.) WE have considered the submissions of the learned Departmental Representative and have gone through the records of this case. It is not disputed that the respondent during the period of dispute had arranged advertisements and had organized road shows for promoting the sales of the cars being manufactured by M/s. Hindustan Motors. This activity of the respondent is covered by the definition of Business Auxiliary Service as given in Section 65(19) of the Finance Act, 1994. The debit notes issued by the respondent to M/s. Hindustan Motors show the total charges for road shows/advertisements at various places and also mention the 50% share of M/s. Hindustan Motors. Though the sales promotion activity being undertaken by the respondent may have benefited both respondent as well as M/s. Hindustan Motors and satisfied the need of their respective business, to the extent the respondent have recovered expenses from M/s. Hindustan Motors, they will be treated as having provided the sales promotion service to them and M/s. Hindustan Motors is to be treated as their client and, hence, on the amount being charged by them from M/s. Hindustan Motors, service tax would be attracted. Therefore, the impugned order setting aside the service tax demand on the ground that there is no relationship of principal and client between the respondent and M/s. Hindustan Motors is not correct. The impugned order is, therefore, set aside and on this point and the order -in -original passed by the Additional Commissioner is restored. The Revenue's appeal is allowed.