The assessee, a manufacturer of P & P medicaments, had engaged distributors in various countries where the goods were exported and sold.
These distributors appointed sales representatives for promotion of the product supplied by the assessee and salary of these sales representatives was reimbursed by the assessee to these distributors on the debit note.The Adjudicating Authority held that the assessee was liable to pay service tax on the amount paid to the distributors under the category of ‘business auxiliary service’. The assessee filed an appeal in the Tribunal.
The Tribunal held that the amount was spent by the distributors for the promotion of their own products. Therefore, the service tax could not be demanded on the said service under the head of ‘Business auxiliary service’.
Citation: [2018] 93 taxmann.com 338 (Mumbai – CESTAT)