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2018 (7) TMI 1376 - AT - Service TaxBusiness Auxiliary services - multilevel marketing termed as Right Concept Marketing (RCM) - Held that - Prior to 15.04.2006, the BAS covered only Commercial Concerns . Only with effect from 15.04.2006, BAS was made applicable to Any Person . Since the Appellant s status was that of an individual, he will not be covered under the definition until date of amendment of BAS, i.e., 15.04.2006 - the demand prior to 15.04.2006 cannot be sustained and is set aside. The adjudicating authority is directed for requantification of the demand and restrict it to that with effect from 15.04.2006 and charge penalty also accordingly - appeal allowed in part by way of remand.
Issues:
Leviability of Service Tax on commission from multilevel marketing services under Business Auxiliary Service (BAS) definition. Analysis: Issue 1: Leviability of Service Tax on commission from multilevel marketing services under BAS definition The appeal was against the Order in Appeal confirming Service Tax on the commission received by the Appellant as a distributor in a multilevel marketing scheme. The Appellant argued that the definition of BAS was applicable only to a "commercial concern" until it was amended on 15.04.2006 to include "any person." The Appellant contended that during the period before the amendment, they would not be covered by the BAS definition as they were not a commercial concern. However, the Tribunal found that commission received in the multilevel marketing arrangement was chargeable to Service Tax under BAS, based on a previous case. The Tribunal noted that the commission received by the Appellant was a result of marketing and promotion efforts for the products, making them providers of Business Auxiliary Service. Despite deciding against the Appellant on the merit of the issue, the Tribunal acknowledged that prior to 15.04.2006, BAS only covered "Commercial Concerns," and as the Appellant was an individual, they would not be covered until the date of the amendment. Therefore, the demand for Service Tax before 15.04.2006 was set aside, and the adjudicating authority was directed to recalculate the demand from that date onwards and impose penalties accordingly. In conclusion, the appeal was allowed partly, with the demand for Service Tax restricted to be applicable from 15.04.2006 onwards.
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