2016 (12) TMI 852 - AT - Service Tax

Business Auxiliary Services - providing multi level marketing services - Period of limitation period - period involved is 2003 to September 2008 whereas the show cause notice stand issued on 24.10.2008 - Held that - We find 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 Charanjeet Singh Khanuja Vs. CST Indore 2015 (6) TMI 585 - CESTAT NEW DELHI . However, 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. As such we find that the longer period of limitation was not available to the Revenue. Ld. Advocate however, fairly agrees that part of the demand would fall within the limitation period - In view of the above, we set aside the impugned order and hold that the demand beyond the limitation period would not be sustainable. Accordingly matter is remanded to the lower authorities for re-quantification of the demand falling within the limitation period. As regards penalty, we agree with Ld. Advocate that penal sections are invokable when there is fraud with an intention to avoid payment of duty. As we have also observed that there was bonafide belief in the industry itself, imposition of penalty upon the appellant would not be justified. Accordingly, we set aside the penalty. Appeal disposed off - matter on remand.

Summary

Issues involved:
Confirmation of service tax demand, imposition of penalty, limitation period for demand, applicability of penalty in case of bonafide belief.

Confirmation of service tax demand:
The judgment confirms the demand of service tax against the appellant for providing multi level marketing services falling under 'Business Auxiliary Services' during the period from 2003 to September 2008. The demand of ?18,08,108 stands confirmed along with interest and penalty. The Tribunal referred to a previous case to establish the classification of multi level marketing under 'Business Auxiliary Services.'

Limitation period for demand:
The issue of limitation period arises as the period involved is from 2003 to September 2008, while the show cause notice was issued on 24.10.2008. The Tribunal held that the longer period of limitation was not available to the Revenue due to the existence of a bonafide belief in the industry and differing views within the department regarding the taxability of the activity. The demand beyond the limitation period was deemed unsustainable, and the matter was remanded for re-quantification within the limitation period.

Imposition of penalty:
Regarding the penalty, it was noted that penal sections are applicable in cases involving fraud with an intention to avoid duty payment. However, since there was a bonafide belief in the industry itself regarding the taxability of the activity, the imposition of penalty on the appellant was deemed unjustified. Consequently, the penalty was set aside by the Tribunal.

In conclusion, the Tribunal set aside the impugned order, holding that the demand beyond the limitation period was not sustainable. The matter was remanded for re-quantification of the demand falling within the limitation period. The penalty imposed on the appellant was also set aside due to the absence of fraudulent intent and the presence of a bonafide belief in the industry. The appeals were disposed of accordingly.