2017 (3) TMI 1099 - AT - Service Tax

Business Auxiliary Services - services of promotion and marketing/distribution of various products of M/s. B.S.N.L - demand - Held that - the present matter is no longer res-integra and the same is decided in favour of the Respondent by the precedent decision of this Tribunal in the case of M/s South East Corporation Vs. Commissioner of Central Excise & Service Tax 2007 (5) TMI 111 - CESTAT, BANGALORE , where it was held that the said activity does not come within the ambit of BAS and hence, the demand is not sustainable - appeal dismissed - decided against Revenue.

Summary

Issues involved:
1. Interpretation of the term "Business Auxiliary Service" under Section 65(105) (zzb) of the Finance Act, 1994.
2. Liability of the appellant to pay service tax on commission received for promoting and marketing products.
3. Applicability of service tax on the commission paid by M/s. B.S.N.L.
4. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994.

Analysis:
1. The case revolved around the interpretation of the term "Business Auxiliary Service" as defined in Section 65(105) (zzb) of the Finance Act, 1994. The appellant was engaged in providing promotion and marketing services for products of M/s. B.S.N.L. The dispute arose regarding whether these services fell under the category of Business Auxiliary Service, subject to service tax.

2. The appellant was asked to provide details of the commission received from M/s. B.S.N.L. and was subsequently issued a show cause notice for recovery of service tax amounting to ?14,30,559. The adjudicating authority confirmed the demand, imposing interest and penalties under relevant sections of the Act.

3. The Commissioner (Appeals) observed that M/s. B.S.N.L. had already paid service tax on the face value of certain products. Relying on precedent decisions, the Commissioner held that the appellant was not liable to pay service tax again on the same value of commission received from M/s. B.S.N.L. The appeal was allowed, setting aside the Order-in-Original.

4. The Revenue raised various grounds of appeal, arguing that the activities were not covered under Business Auxiliary Service, the sale and purchase of SIM/recharge coupons was not a taxable transaction, and that the penalty was not imposable due to lack of evidence of deliberate defiance of law. However, the Tribunal, considering the precedent decision in a similar case, dismissed the appeal in favor of the Respondent.

In conclusion, the Tribunal dismissed the Revenue's appeal based on the precedent decision and set aside the impugned order, ruling in favor of the Respondent regarding the liability to pay service tax on the commission received for promoting and marketing products of M/s. B.S.N.L.