2018 (9) TMI 1146 - AT - Service Tax

Classification of services - Business Auxiliary Service or not?- multi-level marketing service - Held that - The issue of taxability of multi-level marketing service under BAS is no more res-integra and stands settled by this Tribunal in the case of Charanjeet Singh Khanuja vs. C.S.T. Indore/Lucknow/Jaipur/Ludhiana 2015 (6) TMI 585 - CESTAT NEW DELHI , where it was held that such services are classifiable as Business Auxiliary Service and liable to service tax. Extended period of limitation - Held that - The extended period is not applicable in the present case. On the same basis, penalty is not imposable as well - demand of service tax for the normal period of limitation along with interest is upheld - penalty set aside. Appeal disposed off.

Summary

Issues:
1. Taxability of multi-level marketing service under Business Auxiliary Service (BAS).
2. Application of extended period and imposition of penalty.

Analysis:
1. Taxability of multi-level marketing service under BAS:
The appellant's liability for service tax related to providing multi-level marketing service under BAS was confirmed. The appellant did not dispute the taxability of the service but contested the application of the extended period and imposition of penalty. The advocate for the appellant cited a relevant case to support their argument. The respondent claimed that there was a suppression of facts by the appellant and referred to specific legal decisions to support their stance. The Tribunal found that the issue of taxability of multi-level marketing service under BAS was settled in a previous case, where it was held that such services are classifiable as Business Auxiliary Service and subject to service tax.

2. Application of extended period and imposition of penalty:
The Division Bench of the Tribunal had previously considered a similar case regarding the application of the extended period and imposition of penalty. In that case, it was concluded that in situations where there were multiple pending matters and confusion in the field due to unclear laws, the invocation of a longer period and imposition of penalty were not justified. The Tribunal noted that the judgments relied upon by the respondent were not directly related to multi-level marketing services, unlike the case cited by the appellant. Consequently, the Tribunal ruled that the extended period was not applicable in the present case, and no penalty could be imposed based on the same reasoning.

In conclusion, the Tribunal upheld the demand for service tax for the normal period of limitation along with interest but set aside the penalty under Section 78. The appeal was disposed of accordingly.