2016 (2) TMI 335

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.....02.2009 4,95,669 3 ST/423/2010 M. Sundaravadivel v. CCE 01.10.2003 to 30.04.2006 15.04.2009 12,82,365   On the basis of the intelligence gathered that the appellants were not discharging service tax liability on the commissions received from M/s. Amway India Enterprises for undertaking promotion/marketing/sale of the goods. Accordingly, SCNs were issued to the appellants and the adjudicating authority in his OIO confirmed the service tax demand and education cess and secondary education cess under Section 73(2) of the Finance Act, 1994 and also appropriated the amounts already paid and also imposed penalty under Section 76, 77 and 78 of the Act. On appeal, the Commissioner (Appeals) in his impugned orders upheld the demand and upheld the penalty imposed under Section 77 and set aside the penalty imposed under 76 and 78 of the Finance Act. Hence the present appeals. 3. Heard both sides. 4. The Ld. Advocate appearing on behalf of the appellant reiterated the grounds of appeal and submits that the appellants are individuals and household persons engaged in multilevel marketing of Amway products. They buy the products from Amway and sell them in r....

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.... was sold only through chain of distributors by way of direct marketing. The price on which the goods are sold is determined based on the MRP price affixed by Amway. In this regard we find on identical issue the Tribunals Principle Bench, New Delhi, in the case of Mr. Charanjeet Singh & others (Batch of 38 appeals), in Final Order No. 51818 51855/2015 dated 09.06.2015, set aside the impugned orders passed by the Commissioner (Appeals) and remanded the matters to the original authority for denovo adjudication. The relevant portion of the said decision is as under:- "9. The appellants in the appeals ST/138 and 139/2009, ST/406/2010, ST/522 to 525, 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 the respondents in the appeals nos. ST/851 to 854, 863, 864, 865, 866, 867, 868, 869, 870 and 878/2012 filed by the Revenue are distributors of Amway India Enterprises Pvt. Ltd. Amway operate their business of selling of their products under a Business Plan called Multi Level Marketing. As per the Business Starter Guide of Amway India Enterprises Pvt. Ltd. placed on record, they appoint Distributors, who pur....

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....y the client; or [Explanation For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, service in relation to promotion or marketing of service provided by the client includes any service provided in relation to promotion or marketing of games of chance, organized, conducted or promoted by the client, in whatever form or by whatever name called, whether or not conducted online, including lottery, lotto, bingo;] (iii) Any customer care service provided on behalf of the client; or (iv) Procurement of goods or services, which are inputs for the client; or x x x x x x x x  x  x x x x x x x x x x x x x x  x 12. According to the Department, the activity of the assessees is promotion or marketing or sale of the goods produced or provided by or belonging to the client.In our view, the activity which is covered under Section 19(i) is in relation to the promotion or marketing or sale of the goods produced by the client or provided by the client or belonging to the client. This expression, in our view, would not cover the sale of the goods by a person, which belong to him, as the activity of the prom....

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.... in the impugned orders service tax has been demanded on the gross amount of commission and no distinction has been made between the commission earned by a Distributor from Amway based on his own volume of purchase from Amway and the commission earned by him on the basis of the volume of purchases of Amway products made by his sales group i.e. group of second level of Distributors appointed by Amway on being sponsored by the Distributor. For quantifying the service tax demand on the commission received from Amway on the volume of purchase made by the distributors sponsored /enrolled by a particular distributor i.e. the Distributors sales group, these matters would have to be remanded to the Original Adjudicating Authority. 14. Another objection raised by 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 the respondents in appeals nos. ST/851 to 854, 863, 864, 865, 866, 867, 868, 869, 870 and 878/2012 is that the assesses are individuals and during the period till 30.04.2006, service tax was chargeable only ....

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....ate contravention of the provisions of the Finance Act, 1994 or of the Rules made thereunder with intent to evade payment of service tax. The Departments contention, on the other hand, is that the assesses neither obtained service tax registration nor did they declare their activities to the jurisdictional service tax authorities nor did they file ST-3 Return and, therefore, they are guilty of suppression of relevant facts and deliberate violation of the provisions of Finance Act, 1994 and of the Rules made thereunder with intent to evade payment of tax. On considering the rival submissions on this point, we are of the view merely because the assesses did not apply for Service Tax Registration or did not file ST-3 Returns or did not declare their activities to the jurisdictional central excise authorities, it cannot be inferred that this was a wilful act with intent to evade payment of service tax. We also take notice of the fact that in respect of appeals filed by the Revenue, the Commissioner (Appeals) after analyzing the activities of the assesses had taken the view that the same is not covered by the definition of Business Auxiliary Service under Section 65(105) (zzb) read with....