2016 (10) TMI 1295 - AT - Service Tax

Business Auxiliary Services - providing multi level marketing to their principle they have provided services - time limitation - HELD THAT - The issue of multi level marketing falling under the category of Business Auxiliary Services stands finally concluded by the Tribunal in the case of MR. CHARANJEET SINGH KHANUJA AND OTHERS VERSUS CST, INDORE/LUCKNOW/JAIPUR/LUDHIANA AND OTHERS 2015 (6) TMI 585 - CESTAT NEW DELHI . However, it is seen that in the same very decision, the Tribunal has observed that since there was bonafide belief in the industry itself and in as much as two views stands held by the department itself regarding taxability of activity, longer period of limitation would not be available to the Revenue. We further note that in some of the cases, demands are wholly barred by limitation, whereas in some the same are partly barred. Further, in some cases, the entire demand is within limitation period. Penalty - HELD THAT - As there was bonafide belief in the industry itself, imposition of penalty would not be justified - penalty set aside. Matter remanded to the original adjudicating authority to quantify the demands falling within the limitation period - appeal allowed by way of remand.

Summary

Issues:
1. Taxability of multi level marketing under Business Auxiliary Services
2. Confirmation of show cause notice, interest, and penalty
3. Application of longer period of limitation to Revenue
4. Imposition of penalty justified by bonafide belief in the industry

Analysis:

1. The appellants were issued a show cause notice alleging that by providing multi level marketing services to their principal, they were offering services falling under Business Auxiliary Services subject to taxation.

2. The lower authorities confirmed the show cause notice along with interest and penalty under section 78 of the Finance Act 1994.

3. The Tribunal referred to the case of Charanjeet Singh Khanuja Vs. CST Indore, where it was concluded that multi level marketing falls under Business Auxiliary Services. However, the Tribunal noted that due to a bonafide belief in the industry and differing views within the department on taxability, the Revenue could not avail the longer period of limitation. Consequently, demands that were time-barred were set aside, and the matter was remanded to quantify demands within the limitation period.

4. Given the bonafide belief in the industry, the Tribunal found that the imposition of penalty was not justified. Therefore, the penalties imposed on the appellants were set aside.

5. In conclusion, all appeals were disposed of in the above manner, with the orders being dictated and pronounced in open court.