TaxTMI 
TaxTMI 
2023 (9) TMI 926
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....f Rs.13,68,147/- for the period April 2014 to June 2017. In the Notice, it was alleged that the Appellant has provided taxable service as provided under Clause (44) of Section 65B of the Finance Act, 1994, but not paid service tax. It was alleged that the activity of promoting and marketing the products of M/s SSOMPL by the DSA for which they were getting commission from M/s SSOMPL, was a 'taxable service' as defined under Section 65B(44). As the service provided by the Appellant to M/s SSOMPL is neither figuring in the services specified in the Negative List as specified under section 66D of the Finance Act, 1994 nor there is any exemption to the same under any Notification, the Appellant was liable to pay service tax on the commission received by them from M/s SSOMPL. The Notice was adjudicated vide Orderin- Original dated 20.01.2021, wherein the demand made in the Notice was confirmed along with interest and penalty. On appeal, the Commissioner (Appeals) upheld the demands vide impugned order dated 18.01.2022. Aggrieved against the impugned order, the appellant has filed the present appeal. 3. In their grounds of appeal, the Appellant stated that the entire demand has been co....
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....e the activity undertaken by them falls within the ambit of 'Service' as defined under Section 65B(44) of the Finance Act, 1994 and hence liable to service tax for the period under dispute. They stated that the Appellant has not taken registration and not disclosed any information to the department and hence extended period has been rightly invoked to demand service tax. They relied on the following decisions to support their case. (i) Anshita Chawla and Ramesh Chawla Vs Commr. Of S.T. New Delhi , 2016(44)STR300(Tri-Del) (ii) Surendra Singh Rathore Vs CCE, Jaipur-I, 2014(34)STR147(Tri-Del) On the basis of the above decisions, he prayed for upholding the impugned order. 9. Heard both sides and perused the appeal records. 10. We observe that the Appellant, a Direct Selling Agent of M/s.SSOMPL, has received an amount of Rs.1,10,51,180/- as commission, during the period April 2014 to June 2017. The department considered this amount as 'taxable vale' received for rendering the service of promoting and marketing the products of M/s SSOMPL. Accordingly, Notice was issued demanding service tax of Rs.13,68,147/. In the impugned order, the demand of service tax was co....
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....tive List based comprehensive approach to taxation of services with effect from 01.07.2012, the nature of the services as rendered by the Appellant are liable to service tax as they neither figure in services specified in the Negative list as per Section 66D of the Finance Act, 1994 nor there is any exemption to the same under any notification issued by the Government. 11.4. In their submission, the Appellant cited the decision in the case of Charanjeet Singh Khanuja Vs C.S.T./ Indore/Lucknow/Jaipur/Ludhiana, reported in 2016(41)S.T.R.213(Tri-Del), wherein it has been held that the incentive or commission earned for buying certain quantum of goods during a month cannot be considered as 'consideration' received for promoting or marketing the or sale of goods belonging to the client. They submitted that the facts and circumstances of the present case on appeal is similar to the facts of the case cited above. For the sake of ready reference the relevant Paras of the decision are reproduced below: "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....
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....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 marketing of service provided by 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 ....
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....y 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 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 Distributor's sales group, these matters would have to be remanded to the Original Adjudicating Authority." 11.5. From the decision....
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.... by them to M/s.SSOMPL and whether the amount received was towards rendering of any taxable service or not. In the absence of any such corroborative evidence to substantiate the allegations made in the Notice, the impugned order merely confirmed the demands based on the presumption that the entire amount was received towards rendering of taxable service and confirmed the demands made in the Notice. In the decision of the Tribunal cited above, it has been concluded that out of the three categories of income received by a DSA, the income mentioned at (a) and (b) are not liable to service tax and the income mentioned at (c) only liable to service tax. On this count, we observe that the ratio of the decision cited above is applicable for the period after 01.07.2012 also. However, in the impugned order Service tax has been demanded on the gross amount of commission received by the Appellant and no distinction has been made between the commission earned by a Distributor from M/s SSOMPL based on his/her own volume of purchase and the commission earned by him/her on the basis of the volume of purchases of M/s SSOMPL products made by his/her sales group. As no investigation was conducted wi....
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....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 assessees 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 assessees had taken the view that the same is not covered by the definition of "Business Auxiliary Service" under Section 65(105)(zzb) read with Section 65(19) of the Finance Act, 1994. When on the issue involved in this group of cases, there were two views in the Department itself, it cannot be said that on the question as to whether the activity of the assessees was taxable under Section 65(105)(zzb) read with Section 65(19) of ....