2017 (8) TMI 1470 - AT - Service Tax

Tribunal confirms service tax on multi-level marketing services, sets aside penalty, reexamines SSI exemption eligibility

The Tribunal confirmed the demands of service tax, interest, and penalty against the appellant for providing multi-level marketing services classified ... Extended period of limitation - Business auxiliary service or not - multi level marketing service - penalty - Held that:- There were two views of the department itself and it cannot be inferred that there was any suppression on the part of the assessee. Thus, invokation of longer period was held to be not applicable. Penalty - Held that:- Inasmuch as there were number of identical matters pending before the Tribunal, there was confusion in the field and law was not clear, no malafide can be attributed to the appellants so as to invoke penal action against them. Appeal allowed - decided in favor of appellant. Issues:1. Classification of services under business auxiliary service for service tax liability.2. Imposition of penalty on the appellant.3. Applicability of SSI exemption under Notification No.6/05 for a specific case.Analysis:1. The judgment addresses the classification of services provided by the appellant under the category of business auxiliary service for the purpose of service tax liability. The Tribunal confirmed the demands of service tax, interest, and penalty against the appellant based on the provision of multi-level marketing services. The Tribunal relied on a previous decision in the case of Charanjeet Singh Khanuja vs. CST to establish that such services fall under business auxiliary services and are subject to service tax.2. The appellant challenged the imposition of penalty while acknowledging the payment of service tax and interest. The Tribunal considered the precedent set by the Charanjeet Singh Khanuja case, where it was observed that the disputed issue was not free from doubt, and there was confusion in the field due to multiple pending matters before the Tribunal. Consequently, the Tribunal held that no malafide could be attributed to the appellants for penal action and set aside the penalty imposed on them in both appeals.3. Additionally, the appellant raised a specific issue regarding the entitlement to the Small Scale Industry (SSI) exemption under Notification No.6/05 for a case involving Smt. Jaspreet Kaur, where the total clearance was less than Rs. 10 lakh. The Tribunal directed the original adjudicating authority to examine and verify the facts related to SSI exemption for Smt. Jaspreet Kaur and quantify her tax liability, if any. The matter was remanded for further assessment based on the SSI exemption criteria.In conclusion, the judgment clarified the classification of services under business auxiliary service for service tax liability, addressed the imposition of penalty on the appellant considering the lack of clarity in the law, and directed a reexamination of the SSI exemption eligibility for a specific case.