2018 (4) TMI 676 - AT - Service Tax

Non-payment of service tax - commission received - Business Auxiliary Services - Held that - it appears that the appellant has shown in the balance sheet the income as commission which is subjected to service tax under the category of Business Auxiliary service - It is an after-thought that it was profit sharing with the family members. The appellant himself has shown the commission income in the balance sheet which is subjected to service tax - impugned order sustained - appeal dismissed.

Summary

Issues:
1. Applicability of service tax on commission received by the appellant.
2. Whether income shown as commission in the balance sheet is taxable under 'Business Auxiliary Service'.
3. Whether family members can be considered as clients for the appellant.

Analysis:
1. The appellant, engaged in providing 'Business Auxiliary Services', appealed against the Order-in-Appeal demanding service tax on commission received during 2005-2009.
2. The appellant's balance sheet for 2005-2007 indicated income earned as a 'Commission Agent' under 'Business Auxiliary Service', subject to service tax.
3. The appellant argued that the income was from selling goods of family concerns, not services to clients, citing the appellant's status as a private limited company and relying on legal precedent.
4. The Tribunal noted the appellant's afterthought of profit sharing with family members, emphasizing the company's distinct legal identity without relatives.
5. Upholding the impugned order, the Tribunal dismissed the appeal as the appellant had shown commission income in the balance sheet, taxable under 'Business Auxiliary Service'.

This judgment clarifies the tax liability on commission income under 'Business Auxiliary Service', emphasizing the importance of accurate classification and documentation in financial records. It highlights the significance of legal entity status and the distinction between personal and business transactions to determine tax obligations accurately.