Coke wins landmark service tax case

In a judgment that stands to benefit contract manufacturers like fast moving consumer goods (FMCG), pharmaceutical and cosmetic majors, the Bombay High Court today ruled that beverage major Coca-Cola could avail of tax credit on the service tax it pays for advertising and promotions.The judgment also applies to PepsiCo, which had intervened during the hearing in July this year.Since the credit rule for service tax is applicable retrospectively (since 2004), the cola major stands to make significant gains to its bottom-line. It spends 35 to 40 per cent of its revenue on advertising and promotion, .