TaxTMI 
TaxTMI 
2015 (6) TMI 585
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....VARINDER DHIMAN S/O MR. HARNAM SINGH, RASHMI PACHNANDA PROPRIETOR, SMT. MANJIT KAUR & SH. AMARJIT SINGH, SHUDDHATM PRAKASH BHARILL PROPRIETOR, SH. ASHOK KUMAR ARORA S/O SH HANS RAJ, SH. PARDEEP KUMAR S/O SH RAM LAL, SH. SARABJIT SINGH S/O SH MOHAN SINGH, SH. MANJIT PAL SINGH S/O SH BHAKSHISH SINGH, ATUL SONDHI PROPRIETOR, MS KAVITA SUKHIJA PROPRIETOR OF M/S SUKHIJA KAVITA & SUNIL, COMMISSIONER OF CUSTOMS(PREVENTIVE)- LUCKNOW, SH. RAJVEER SINGH, SMT SANGEET, DEEPAK BATISH, SH. SHEKHAR CHOUDHARY PROPRIETOR OF M/S CHAUDHARY SHEKHAR & MADHVI, NITESH DIXIT, MR SANJIV GANDHI PROPRIETOR OF M/S GANDHI, SANJIV & MEENA, RAJAN SACHDEV & MALANI VERSUS PRAMILA SINGH, SNEH LATA, SUNITA SINGH, AJEET SINGH, SHRI KRISHNA MURARI, SHAILENDRA SRIVASTAVA, NANDITA PANDIT, SUCHI NAITHANI, SAURABH SAXENA, VANDANA NIGAM, PREM LATA SINGH, SHARMILA GUPTA, TARUN PRASAD, C.C.E. LUDHIANA, C.S.T. DELHI, C.C.E. INDORE, C.C.E ALLAHABAD, C.C.E. JAIPUR I, C.C.E. LUCKNOW, C.C.E. LUDHIANA Honble Shri Justice G. Raghuram, President And Honble Shri Rakesh Kumar, Member (Technical),JJ. For the Petitioner : Shri Kapil Kher, Sr. Advocate, Shri J.K. Mittal, Shri Vineet Singh and Shri Abhisek Jaju, Shri sidhant Jain, S....
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....made by the Distributor during the month for sale or for personal consumption; and (c) monthly commission received from Amway based on the volume of the sale made by the second level Distributors appointed by Distributors i.e. the Distributors sales group. 2. According to the Department, the activity of the appellants in Appeals nos. ST/138 and 139/2009, ST/406/2010, ST/522 to 525/2010, ST/257,259, 433,473,502,580,1123,1383,1781 & 1802/2011, ST/56, 86, 126, 645/2012 and ST/1723-1724, 2337 and 2810/2012 and of the respondents in appeals nos. ST/851 to 854, 863, 864, 865, 866, 867, 868, 869, 870 and 878/2012 filed by the Revenue is covered by the definition of Business Auxiliary Serviceas given in Section 65(105)(zzb) read with Section 65 (19) of the Finance Act, 1994, as according to the Department, the activities of these Distributors of Amway are covered by Clause (i) of Section 65(19) promotion or marketing or sale of goods produced or provided by or belonging to the client. Accordingly, the show cause notices were issued to the persons mentioned above for demand of service tax from them under proviso to Section 73(1) of the Finance Act, 1994 along with interest thereon under ....
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....012 CCE Vs.Ajeet Singh 2006-07 to 2009-10 13.09.2010 3,70,283/- 27. ST/852/2012 CCE Vs.Pramila Singh 2006-07 to 2009-10 13.09.2010 2,73,978/- 28. ST/853/2012 CCE Vs.Sneh Lata 2006-07 to 2009-10 13.09.2010 2,21,502/- 29. ST/854/2012 CCE Vs.Sunita Singh 2006-07 to 2009-10 13.09.2010 3,95,522/- 30. ST/863/2012 CCE VS.Shri Krishna Murari 2006-07 to 2009-10 13.09.2010 Rs. 2,57,306/- 31. ST/864/2012 CCE Vs.Shailendra Srivastava 2006-07 to 2009-10 13.09.2010 Rs. 3,52,088/- 32. ST/865/2012 CCE Vs Nandita Pandit 2006-07 to 2009-10 13.09.2010 Rs. 3,21,496/- 33. ST/866/2012 CCE Vs.Suchi Naithani 2006-07 to 2009-10 13.09.2010 Rs. 2,18,196/- 34. ST/867/2012 CCE Vs. Saurabh Saxena 2006-07 to 2009-10 13.09.2010 Rs. 2,35,043/- 35. ST/868/2012 CCE Vs.Vandana Nigam 2006-07 to 2009-10 13.09.2010 Rs. 3,14,256/- 36. ST/869/2012 CCE Vs.Prem Lata Singh 2006-07 to 2009-10 13.09.2010 Rs. 3,63,725/- 37. ST/870/2012 CCE Vs.Sharmila Gupta 2006-07 to 2009-10 13.09.2010 Rs. 86,438/- 38. ST/878/2012 CCE Vs. Tarun Prasad 2006-07 to 2009-10 13.09.2010 Rs. 3,08,810/- 3. The above show cause notices were adjudicated by the Original Adjudicati....
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.... month. (2) There is no specific allegation as well as the mention of the amount of commission attributable to the sales caused by the sales group of a Distributor consisting of second level of Distributors appointed through a Distributor. (3) During the period till 30.04.2006, in terms of Section 65(105) (zzb) service provided to a client by a commercial concern in relation to Business Auxiliary Service was taxable. It is only by the amendment made by Finance Act, 2006 w.e.f. 1.5.2006, that the word commercial concern was substituted by any person. In the present case, the Distributors are the individual persons. The Board vide Circular No.62/11/03/ST dated 25.08.2003 has clarified that individual cannot be treated as a commercial concern. The Tribunal in the case of Mangal Vs. CCE, Jaipur reported in 2008 (11) STR 17 has also held that during a period prior to 1.5.2006, individuals could not be treated as a commercial concern. In view of this, irrespective of whether the Distributors in these cases had provided Business Auxiliary Service to Amway or not, no service tax can be charged from them on the amount of commission received by them during the period prior ....
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....e under Section 65(105)(zzb) read with Section 65(19)(i) of the Finance Act, 1994. Shri Dixit pleaded that ratio of these judgements of the Tribunal is squarely applicable to the facts of these cases. With regard to the limitation, he pleaded that the Distributors in these group of cases had neither declared their activities to the Department nor had obtained the service tax registration and hence, they have suppressed the relevant facts from the department and, accordingly, the longer limitation period under proviso to Section 73(1) has been correctly invoked and penalty under Section 76, 77 and 78 of the Finance Act has been correctly imposed. With regard to the assessees plea that they are not a commercial concern, Shri Dixit pleaded that since they were acting as distributors of Amway products and were engaged in promoting the sales of the products of Amway for which they were receiving the commission, each of them has to be treated as commercial concern. With regard to the Assessees plea for small service provider sexemption notification no.5/2006-ST, Shri Dixit pleaded that since they were providing the service of marketing or sales promotion of branded products, they would n....
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....y the products sales of the distributors appointed through him which constitute his sales group. 10. In these cases, the service tax has been demanded on the gross amount of commission received by each of the Distributors (assessees) of Amway during the period of dispute, as mentioned in the Chart in para 2 above. The The departments contention is that these commission received by the assessees from Amway are in respect of the Business Auxiliary Service provided by them to Amway. On the other hand, the contention of the assessees is that their activity is not covered by the definition of Business Auxiliary Service as given under Section 65(105)(zzb) read with Section 65(19) of the Finance Act, 1994. 11. In terms of Section 65(105)(zzb), the service provided to a client by Commercial concern in relation to the Business Auxiliary Service is taxable. The term Business Auxiliary Service is defined under Section 65(19) of the Finance Act, 1994 as under:- Section 65(19): Business auxiliary service means any service in relation to,- (i) Promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) Promotion or marketin....
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....or, but is linked to the goods purchased by the Distributor from Amway during a month and is in the nature of volume discount. Therefore, no service tax is chargeable on the profit earned by the distributors from sale of the goods in retail which had been purchased by them from Amway and on the commission earned by them every month on purchase of certain quantum of goods from Amway. 13. However, activity of a Distributor of identifying other persons, who can be roped in for sale of the Amway products/marketing of the Amway products and who on being sponsored by that Distributor are appointed by Amway as second level of distributors is, in our view, the activity of marketing or sale of the goods belonging to Amway and the commission received by the Distributor from Amway, which is linked to the performance of his sales group (group of the second level of distributors appointed on being sponsored by the Distributor) would have to be treated as consideration for Business Auxiliary Service of sales promotion provided to Amway. Therefore, service tax would be chargeable on the commission received by a Distributor from Amway on the products purchased by his sales group. However, in th....
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.... by a person under a brand name/trade name, whether registered or not, of another person and in this group of cases, the Distributors have promoted the sale/marketing of branded products. This plea of the Department is not correct, as in these cases the distributors are engaged in promoting sales/marketing of the products of Amway and they are not marketing or promoting any taxable service which is branded and the brand name belongs to another person. Marketing or sale promotion of branded products by a person/ commission agent does not amount to providing branded service by him and hence, marketing or sales promotion of a branded product does not come under the exclusion category as mentioned in the proviso to notification no.6/05-ST. In this group of cases, the eligibility of the Distributors (assessees) for the exemption notification no.6/2005-ST has not been examined and for this purpose also, these matters have to be remanded to the Original Adjudicating Authority. 16. Another plea raised in these appeals is regarding limitation. It is the contention of the assesses that there was absolutely no suppression or misstatement of facts or deliberate contravention of the provisio....