In a recent judgment, the Bombay High Court ruled that a beverages’ major could avail of tax credit on the service tax it pays for advertising and promotions. They can avail of the service tax rebate as Cenvat credit, against their excise duty liability on concentrates which they supply to their contract manufacturers. The ruling, passed by a division bench, stands to benefit companies in other sectors, too, like cosmetics and pharmaceuticals, since they too follow the contract manufacturing model and advertise and promote the end-products.
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