TaxTMI 
TaxTMI 
2024 (7) TMI 1790
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.... payable Accordingly, show cause note was issued to the appellant proposing a demand of service tax of Rs. 4,07,664/- by invoking the extended period provisions under section 73 of the Finance Act, 1994. It was also proposed to charge interest. Penalty was also proposed to be imposed on them under sections 76, 77 and 78 of the said Act. The lower authority after considering submissions of the appellant passed an order wherein he confirmed the demand of service tax. He further ordered For payment of interest on the demanded amount under section 75 of the said Act. He imposed penalties of Rs. 4,07,664/- under section 78 of the said Act Rs.1,000/- under section 77 of the said Act and Rs. 1,000/- also under section 77 of the said Act. Aggrieved, the appellant have filed this appeal." Therefore, a Show Cause Notice was issued to the appellant to demand Service Tax under the category of "Business Auxiliary Service" for the period May, 2006 to March, 2008. The matter was adjudicated. The demand of Service Tax was confirmed along with the interest and penalty was also imposed. 2. Aggrieved from the said order, appellant is before us. 3. The Ld. Counsel for the appellant appearing ....
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....y commission on the basis of the success and productivity as defined by 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 (assessee) of Amway during the period of dispute, as inentioned in the Chart in para 2 above. The department's contention is that these commission received by the assessee from Anway are in respect of the Business Auxiliary Service provided by them to Amway. On the other hand, the contention of the assessee 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) (/b), 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 Promotion or marketing or sale of goods produced or provided by or be....
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....s this commission is not linked to the goods sold by the Distributor 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 caned 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, our 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 best sponsored by the Distributor) would have to be treated as considerations Tor Business Auxiliary Service of sales promotion provided to Amway. Therefore, service tax would be chargeable on the commission received by a Distributor from Amway....
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....a is that this exemption is not applicable when the taxable service is provided 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 place of the Department is not correct, as in these cases the distributors are engaged in promoting sales/marketing of the products of any 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 by him amount to providing branded service by him and hence, marketing or sales promotion of a branded product does not come under the exclusion category mentioned in the proviso to Notification No.6/05-ST. In this group of cases, the -ST eligibility of the Distributors (assessee 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 of the contention of the assessee that there....