TaxTMI 
TaxTMI 
2025 (5) TMI 1022
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....4.2019 07-10/2018-19 dated 19.11.2018 2010-11 3,57,023/- 3. Indira Devi Chhabra ST/51638/2019 30/2013 dated 18.04.2013 OIA No. 390/2019 dated 24.04.2019 07-10/2018-19 dated 19.11.2018 April 2011 to Jan. 2013 2,30,299/- 4. Indira Devi Chhabra ST/51639/2019 339/2013 dated 23.9.2009 OIA No. 390/2019 dated 24.04.2019 07-10/2018-19 dated 19.11.2018 10.09.2004 to 31.12.2007 9,65,442/- 5. Rekha Kothari ST/51640/2019 52/2016 dated 31.07.2017 OIA No. 396/2019 dated 25.04.2019 53/2017-18 dated Nil 2014-15 to 2015-16 3,64,932/ 6. Rekha Kothari ST/51641/2019 71/2013 dated 27.09.2013 OIA No. 374/2019 dated 16.04.2019 16/2018-19 dated 9.10.2018 2011 to Dec. 2012 63,467/- 7. Manish Jain ST/51721/2019 06/2011 dated 6.9.2011 OIA No. 372/2019 dated 15.04.2019 06/2011 dated 30.10.2018 2010-11 1,09,991/- 2. The facts relevant for the purpose, are as follows: 2.1 The department received an information with respect to M/s Fashion Suiting Pvt. Ltd., Bhilwara-[herein referred as M/s FSL] who are engaged in multi level marketing under the name Right Concept Marketing -[RCM]. The goods are marketed and sold by their dedicated n....
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....nd not for the second line of distributors and listed by M/s FSL. The final order of this Tribunal in Appeal No. 54386-54390/2016 dated 17.10.2016 is relied upon. But the authorities below have chosen to tax the value of total commission earned for distributor sponsored by the appellant as well as other distributions sponsored by the subsequent distributors. It is further submitted that the directions of remand in regard to value of taxable service have also not been considered by the original adjudicating authority. The Commissioner (Appeals) vide the impugned order has also failed to consider the same. The order under challenge is, therefore, prayed to be set aside and all the appeals as mentioned above are prayed to be allowed. 5. While rebutting these submissions, learned Departmental Representative has mentioned that the adjudicating authorities below have already categorized the source of income of appellants into three streams of income. The appellants are also held not liable to any tax with respect to two streams of income i.e. distributors profit margin and commission for sale or personal consumption. The service tax has been confirmed only on the 3rd stream of income i.....
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.... roped in for sale of the M/s FSL products/marketing of the M/s FSL products and who on being sponsored by that Distributor are appointed by M/s FSL as second level of distributors, in our view, the activity of marketing or sale of the goods belonging to M/s FSL and the commission received by the Distributor from M/s FSL, which is linked to the performance of his sales group (group of the second level of distributors appointed on being sponsored by the Distributor) we hold that it should have to be treated as consideration for Business Auxiliary Service of sales promotion provided to M/s FSL. Therefore, service tax would be chargeable on the commission received by a Distributor from M/s FSL 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 M/s FSL based on his own volume of purchase from M/s FSL and the commission earned by him on the basis of the volume of purchases of M/s FSL products made by his sales group i.e. group of second level of Distributors appointed by M/s FSL on being sponsored by the Distribut....
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....milarly, any incentive or commission received for buying certain quantum of marketing or sale of goods belonging to client, more so, as commission not linked to goods sold but linked to goods purchased by distributor during a month and in nature of volume discount. Therefore, no service tax chargeable on profit earned by distributors from sale of goods in retail and on commission earned on purchase of certain quantum of goods. However, activity of identifying other persons, for sale and marketing of products on being sponsored by distributor appointed by Amway as second level of distributors is activity of marketing or sale of goods belonging to Amway and commission received linked to performance of sales group to be treated as consideration for Business Auxiliary Services. Service tax would be chargeable on commission received on products purchased by sales group. Section 65(105)(zzb) read with Section 65(19)(i) of Finance Act, 1994. (ii) Business concern can be proprietary owned by individual and there is no difference between proprietary firm and that person. When individual engages himself in commercial activity, he has to be treated as business or commercial concern. Therefo....