2018 (2) TMI 486 - AT - Service Tax

Online Information and data processing & retrival - the recipient who create further chain of clients of the company were called associates and get commission from M/s.E-Biz Company for the service provide - whether taxable under Business Auxiliary Services or otherwise? - Held that - an identical issue was considered by this Bench of the Tribunal in the case of Sumit Singh v. CCE & ST, Ghaziabad wherein this Tribunal held that the appellant was paying service tax on the full amount which receives through the receipt and the amount received by the agents are already taxed then no further liability of service tax arose - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Taxability of service provided by the appellant as a business auxiliary service under section 69(19) of the Finance Act, 1994.
2. Confirmation of demand for service tax, interest, and penalties imposed by the adjudicating authority.
3. Appeal against the order before Commissioner (Appeals) and the Appellate Tribunal CESTAT, Allahabad.

Analysis:

1. The appellant was providing services by developing a chain of clients for a company and receiving a commission for each client. The issue revolved around whether this service fell under the definition of "Business Auxiliary Service" as per section 69(19) of the Finance Act, 1994. The appellant was alleged to be taxable under this category, leading to the issuance of a Show Cause notice by the authorities.

2. The Show Cause notice proposed the confirmation of demand for service tax along with interest and penalties under various sections of the Finance Act, 1994. The adjudicating authority confirmed the demand, interest, and penalties in the impugned order. Despite the appellant's deposit of the demanded amount, penalties were imposed under sections 76 and 77 of the Act.

3. The appellant's appeal against the order was unsuccessful before the Commissioner (Appeals), leading to the present appeal before the Appellate Tribunal CESTAT, Allahabad. The Tribunal referred to a previous case where a similar issue was considered, and the appeal was allowed based on the precedent. The Tribunal held that since the company had already paid service tax on the gross receipts, and the agents had received commissions on the taxed amount, no further liability of service tax arose for the appellant.

In conclusion, the Appellate Tribunal CESTAT, Allahabad set aside the impugned order and allowed the appeal, providing consequential relief to the appellant based on the precedent and interpretation of the tax liability in similar circumstances.