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of <h1>Tribunal rules for distributor on service tax demands, overturns penalties, remands for quantification.</h1> The Tribunal ruled in favor of the appellant, an independent distributor facing service tax demands for received commissions from distributing products. ... Liability of service tax - commission received - M/s. Herbalife distributes / sells their nutritional food products and cosmetics through a network of independent distributors across India - The department was of the view that the appellant has not discharged the liability of service tax for the commission received - Held that: - There is no material to establish that the appellant has suppressed facts and in fact during the relevant time the issue whether an independent distributor engaged in multilevel marketing is subject to levy of service tax was under much dispute - the demand for the extended period of limitation is unjustified and requires to be set aside - the matter is remanded to the adjudicating authority for the limited purpose of quantification of the service tax for the normal period - appeal allowed by way of remand. Issues:1. Liability of service tax for commission received by an independent distributor of a company distributing products through a network of distributors.2. Application of limitation period in service tax demand cases.3. Consideration of suppression or misstatement of facts in determining service tax liability.4. Applicability of penalties in service tax cases.Analysis:1. The appellant, an independent distributor of a company distributing products through a network of distributors, faced a service tax demand for the commission received. The department alleged non-discharge of service tax liability, leading to show cause notices, adjudication, and confirmation of demand, interest, and penalties. The Commissioner (Appeals) upheld the decision, prompting the appeal.2. During the hearing, the appellant's counsel referred to a similar case where the Tribunal set aside the demand due to limitation issues and remanded the matter for quantification within the normal period. The Tribunal based its decision on a previous case law. The respondent reiterated the findings in the impugned order.3. The Tribunal, analyzing a comparable case of another distributor of the same company, concluded that the demand for the normal period was justified as there was no suppression or misstatement to evade service tax payment. Penalties were also overturned. The records indicated no suppression of facts by the appellant, especially considering the ongoing dispute regarding service tax applicability to distributors engaged in multilevel marketing.4. Following the precedent set by the Tribunal in the earlier case, the judge ruled that the demand for the extended period lacked justification and was set aside. The penalties imposed were also revoked. However, the matter was remanded to the adjudicating authority for quantification of service tax for the normal period. The appeal was partly allowed with consequential relief, if any, granted.
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