2026-VIL-1715-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax – Taxability of manufacture of liquor on behalf of the brand owner – Appellant, engaged in manufacturing of liquor, entered into an agreement with the brand owner to manufacture and sell liquor under the brand name on revenue sharing basis. The raw material was procured as per the instructions of the brand owner. Show cause notices were issued alleging that the Appellant provided business auxiliary service of bottling and packing on job work basis for the period April 2010 to June 2017. The demand of service tax and penalties were confirmed and upheld by the Commissioner (Appeals). The Appellant contended that being a manufacturer it was excluded from business auxiliary service and that, under the negative list regime, processes amounting to manufacture are exempt – Whether the activity of manufacturing of liquor by the Appellant on behalf of the brand owner is liable to service tax – HELD – Section 66D of the Finance Act, 1994 contains the negative list of services, and with effect from 01.06.2015 it covers services by way of carrying out any process amounting to manufacture or production of goods excluding alcoholic liquor for human consumption. Manufacture of alcoholic liquor for human consumption is therefore outside the ambit of the exemption. The Delhi High Court in Carlsberg India Pvt. Ltd. held that manufacturing by an entity for itself is not a service, whereas manufacture of alcoholic liquor by one entity for another by way of job work is a service within the meaning of Section 65B(44) and is amenable to service tax. As the Delhi High Court is the jurisdictional High Court, the Tribunal is bound to follow the same. The decision of the Madhya Pradesh High Court in Maa Sharda Wine Traders is not applicable, as the High Court had no occasion to examine the negative list regime. The Tribunal decisions relied upon by the Appellant merely followed that decision and are also not applicable. The activity of manufacturing of liquor on behalf of others is a taxable service and the Appellant is liable to pay service tax – The appeals are dismissed
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