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2018 (11) TMI 834 - AT - Service TaxSSI Exemption - use of brand name of others - earning commission for promotion by way of marketing and selling of branded goods under the brand name/trade name viz., BATA on behalf of their principals M/s Bata India Ltd. - case of appellant is that the said commission is less than threshold limit under the Notification No. 06/2005-ST and 33/2012 it is not taxable. Held that - Services rendered by the appellant is to Bata India Limited and get paid for such services; appellant is not into rendering of any branded services to customers, who purchase only branded footwear from the outlet. In this situation, the argument of the Revenue that services rendered by the appellant being in the Bata showroom are taxable services provided by a person under a brand name or trade name it cannot be held so. Similar issue decided in the case of Commissioner of Central Excise, Chandigarh Vs. A.S. Financial 2014 (7) TMI 746 - CESTAT NEW DELHI , where it was held that respondent cannot be treated using the brand name of ICICI Bank Ltd. - Another case law, which is similar to the issue involved, is Bakliwal Brothers Vs. CCE, Raipur 2017 (9) TMI 84 - CESTAT NEW DELHI wherein, the appellant was having a shop and activity of promoting sale of Koutons brand of readymade garments. The bench again held that such activity is not taxable, benefit of exemption for small scale service providers is available. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Liability of service tax on commission earned by the appellant for marketing and selling branded goods. 2. Eligibility for Small Scale Service Provider (SSI) exemption under Notification No. 06/2005-ST and 33/2012-ST. 3. Applicability of penalties under Sections 76 and 77 of the Finance Act, 1994. Issue-wise Detailed Analysis: 1. Liability of Service Tax on Commission Earned: The appellant, engaged in marketing "Bata" brand footwear on a commission basis, was found by the Department to be providing a taxable service under Business Auxiliary Service as per the Finance Act, 1994. The Department issued show cause notices demanding service tax along with interest and penalties for the period up to March 2011 and subsequent periods. The Adjudicating Authority confirmed the demand of ?59,405/- under Section 73(1) of the Act, along with interest under Section 75, and imposed penalties under Sections 76 and 77 for non-payment of service tax and failure to obtain registration and furnish returns. 2. Eligibility for SSI Exemption: The appellant contended that their total commission was less than ?10 lakhs, thus qualifying for SSI exemption under Notification No. 33/2012-ST. They argued that the service provided was not under a brand name but merely involved selling products entrusted by Bata India Limited. The Adjudicating Authority, however, held that the appellant was using the brand name "Bata" and was therefore not eligible for the exemption, as per the proviso to the notification which excludes services provided under a brand name from the exemption. 3. Applicability of Penalties: The appellant argued that penalties should not be imposed as they were under a bona fide belief that they were not liable to pay service tax. The Adjudicating Authority imposed penalties under Section 76 for failure to pay service tax, Section 77(1)(a) for failure to obtain registration, and Section 77(2) for failure to furnish ST-3 returns. Tribunal's Findings: The Tribunal considered the submissions and perused the records. It was undisputed that the appellant received commission on sales from the Bata outlet. The Revenue's argument was based on the proviso to the exemption notification, which excludes services provided under a brand name from the exemption. However, the Tribunal found that the appellant was not rendering branded services to customers but was merely selling branded footwear and receiving commission from Bata India Limited. The services provided were not under a brand name as envisaged by the proviso. Relevant Case Laws: The Tribunal referred to the case of A.S. Financial, where similar services provided to ICICI Bank were not considered as services under a brand name. The Tribunal also cited other cases like Bakliwal Brothers Vs. CCE, Raipur, where promoting the sale of branded goods did not disqualify the appellant from SSI exemption. Conclusion: The Tribunal held that the services rendered by the appellant did not fall under the proviso excluding brand name services from the exemption. Consequently, the appellant was eligible for the SSI exemption. The impugned orders were set aside, and the appeals were allowed, with the Tribunal finding no reason to deviate from the established view in similar cases. Order: The impugned orders are set aside, and the appeals are allowed.
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