2014 (11) TMI 1093 - AT - Service Tax

Seeking exemption from the requirement of making any further deposit of the amount confirmed - Demand alongwith interest and penalties - appellants were distributor/marketing agency of M/s Forever Living India Pvt. Ltd. - Business Auxiliary service - service tax not paid on commission received - Held that - the impugned demand is based on the amount of commission received by them under multilevel marketing scheme. So their plea that they were selling their own goods is obviously untenable and also devoid of any basis and also this plea was never put forth by them earlier. Indeed the issue is squarely covered against them vide CESTAT order in the case of Shri Surendra Singh Rathore & Others Vs. CCE Jaipur-I 2013 (8) TMI 149 - CESTAT NEW DELHI . Therefore in view of the same the requirement of pre-deposit is waived of. - Decided against the appellant

Summary

Issues:
1. Exemption from making further deposit of confirmed amount.
2. Duty demand confirmation along with interest and penalties under Sections 77 & 78 of Finance Act, 1994.
3. Applicability of Business Auxiliary Service to the appellants.
4. Failure to submit a reply to the Show Cause Notice.

Analysis:

1. The appellant filed a Misc. application seeking exemption from making additional deposit of the confirmed amount. They also submitted a stay application alongside their appeal against Order-in-Appeal No. 45/ST/Appl/DLH-IV/2013, which upheld the duty demand of Rs. 5,43,416 along with interest and penalties under Sections 77 & 78 of Finance Act, 1994. The appellants, acting as a distributor/marketing agency, were covered under Business Auxiliary service but failed to pay service tax on the commission received. Despite being issued a Show Cause Notice during the period of 1.4.2004 to 31.3.2009, the appellants did not provide any response. They only appeared during the personal hearing to mention their intention to submit written submissions, which they failed to do.

2. The appellants argued that they were selling their own goods and thus should not be classified under Business Auxiliary Service. However, upon examination, it was evident that the impugned demand was based on the commission received by them through a multilevel marketing scheme. Therefore, their claim of selling their own goods was deemed untenable and lacked any substantive basis. This argument was also never raised by the appellants previously. The case law cited further supported this position, emphasizing that the commission received by the appellants for marketing and promoting products constituted a service falling under Business Auxiliary Service.

3. The tribunal found that the issue was decisively against the appellants, and their appeal lacked merit. Consequently, the requirement of pre-deposit was waived, and the appeal was dismissed. This decision also led to the disposal of the Misc. application and stay petition filed by the appellants.

This detailed analysis of the judgment highlights the key issues addressed by the tribunal, focusing on the exemption request, duty demand confirmation, applicability of Business Auxiliary Service, and the consequences of failing to respond to the Show Cause Notice.