Advisory services commissions subject to service tax liability confirmed with penalty for deliberate non-registration

CESTAT New Delhi dismissed the appeal where the appellant provided advisory/consultancy services to clients and received commissions during 2014-2018. The tribunal held that such services were taxable under service tax provisions and the appellant was liable to pay tax on commissions received. The demand was confirmed at Rs. 12,96,358 after considering SSI exemption benefits and appropriate tax rates. Extended limitation period was validly invoked due to appellant's deliberate non-registration and intent to evade tax liability. Penalty was upheld as justified given the willful non-compliance.

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Issues Involved:
The appeal challenges the demand of service tax on commission received for providing advisory services to multiple parties, including M/s Adarsh Credit Cooperative Society Ltd., invoking the extended period of limitation and rejecting the SSI exemption claim.

Analysis of Judgment:

Issue 1: Taxability of Advisory Services
The appellant received commission for providing advisory services to various parties, including M/s ACCSL. The department alleged the activity falls within the definition of "service" u/s 65 B (44) of Finance Act, 1994, not covered under negative list u/s 66D or mega exemption Notification No. 25/2012-ST. The demand of Rs. 12,96,358/- was confirmed, considering the appellant's activity as a taxable service.

Issue 2: SSI Exemption Claim
The appellant claimed SSI exemption, arguing the amount received was below Rs. 10 lakhs. However, the adjudicating authorities rejected this claim, stating the appellant was liable to pay service tax on the commission received during the period in question.

Issue 3: Invocation of Extended Period
The department invoked the extended period of limitation, alleging the appellant intentionally avoided paying service tax despite Notification No. 7/2003-ST clarifying the taxability of received commissions. The extended period was upheld due to the appellant's failure to register and pay taxes, indicating an intention to evade tax liability.

Conclusion:
The Tribunal upheld the order-in-appeal, confirming the demand and penalty imposed on the appellant. The plea of ignorance or bonafide belief was rejected, and the extended period was deemed justified. The appeal was dismissed, sustaining the order under challenge.

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