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2018 (8) TMI 698 - AT - Service TaxBusiness Auxiliary Services - It has been case of the Department that the appellant was not paying Service Tax on the commission received by him from M/s Amway - Held that - The matter is no longer re-intergra as this Tribunal in the case of MR. CHARANJEET SINGH KHANUJA AND OTHERS VERSUS CST, INDORE/LUCKNOW/JAIPUR/LUDHIANA AND OTHERS 2015 (6) TMI 585 - CESTAT NEW DELHI has already laid down the principles with regard to the facts as involved in the present appeal and numerous appeals on the same issue were remanded back to the Original Authorities for deciding the matter afresh. Matter remanded back to the Original Adjudicating Authority to decide the issue afresh in view of the findings of this Tribunal in the above mentioned order. Appeal allowed by way of remand.
Issues Involved:
Service Tax liability on commission received by a distributor from a company. Interpretation of 'Business Auxiliary Services'. Taxability of commission received by distributors. Applicability of duty exemption under notification No. 5/2006-ST. Limitation period for tax demand. Analysis: 1. Service Tax Liability on Commission Received: The appellant, working as a distributor for a company, was alleged to not pay Service Tax on the commission received. The Department contended that services provided by marketing agents fall under 'Business Auxiliary Services'. The Tribunal, in a previous order, clarified that the sale of goods by distributors does not constitute service to the company. However, commission linked to the performance of a distributor's sales group is considered a Business Auxiliary Service, making it taxable. The Tribunal emphasized the distinction between commission based on personal sales and sales group performance, remanding matters for quantifying Service Tax demand accurately. 2. Interpretation of 'Business Auxiliary Services': The Tribunal differentiated between activities related to promoting, marketing, or selling goods belonging to the client and the distributor's own goods. It clarified that commission received for promoting the company's products through a sales group constitutes a taxable service. The ruling highlighted the need to distinguish between personal sales and sales group performance to determine tax liability accurately. 3. Applicability of Duty Exemption: Regarding duty exemption under notification No. 5/2006-ST, the Department argued that the exemption does not apply when services are provided under another person's brand name. However, the Tribunal disagreed, stating that distributors promoting a company's products do not provide branded services, making them eligible for the exemption. The Tribunal directed the Original Adjudicating Authority to examine the eligibility of distributors for the exemption in each case. 4. Limitation Period for Tax Demand: The appellant claimed no deliberate evasion of Service Tax, arguing against the longer limitation period for tax demand. The Department alleged suppression of facts due to non-registration and non-declaration of activities. The Tribunal noted differing views within the Department on the taxability of the activities, concluding that the longer limitation period was not applicable. It ruled that tax could only be demanded within the normal one-year limitation period from the relevant date, emphasizing the need for clarity in tax assessments. In conclusion, the Tribunal set aside the impugned orders and remanded the matters to the Original Adjudicating Authority for fresh adjudication based on the Tribunal's observations and directions. The appeal was allowed by way of remand, ensuring a detailed review of the issues in light of the Tribunal's clarifications and rulings.
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