UCB INDIA PVT. LTD. Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner has challenged an order dated 29-1-2016 at Annexure-A to the petition passed by the Commissioner of Service Tax in following background.

(2.) The petitioner is a company registered under the Companies Act and is engaged in manufacture, marketing and distribution of pharmaceutical products falling under Chapter 30 of the Central Excise Tariff Act, 1985. The petitioner company is a subsidiary of UCB S.A., Belgium. The Commissioner of Service Tax, Daman issued a show cause notice dated 22-10-2012 to the petitioner calling upon to show cause why (i) service tax amounting to Rs. 4,51,68,519/- (Service Tax Rs. 4,38,52,930/- + Education Cess Rs. 8,77,059/- + S.H. Education Cess Rs. 4,38,530/-), as detailed in the Annexure-A attached to this SCN, should not be recovered under proviso to Section 73(1) of the Finance Act, 1994 (for short 'the Act'); (ii) interest, at the applicable rate, on the amount mentioned in (i) above, should not be charged and recovered under Section 75 of the Finance Act, 1994; and (iii) penalty should not be imposed under Sections 77 and 78 of the Finance Act, 1994.

(3.) In the show cause notice, it was stated that the petitioner had incurred expenses towards the sales promotion. Upon being inquired, the company had informed that the sales promotion expenses pertained to business expenditure to promote its products by conducting the doctor's meetings, scientific sessions with doctors, distributing physician samples, printing of literatures, printing of gimmicks, printing of visual aids, supporting hospitals and clinics to purchase medical instruments, field business meeting to discuss about market trends and strategies, sales target related incentives to field personnel, etc. According to the authorities, these activities appeared to be covered under the category of 'Business Auxiliary Service' and the petitioner was therefore, liable to pay service tax on the same. The show cause notice further refers to the statement of Shri Satish, Director of the company dated 12-9-2012 which includes details of sales promotion expenses made by the company during the period between 2007-08 to June, 2012. The show cause notice also refers to a statement of Shri Banibrata Lahiry, an officer of the company giving details of total expenses towards the sales promotion expenses and thereafter, records as under: