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2019 (1) TMI 1305 - AT - Service TaxBusiness Auxiliary Service - distribution of the products of M/s. Conybio Healthcare (India) Pvt. Ltd. by the appellant under the Direct Selling Concept commonly known as Multi-level Marketing - time limitation - Held that - The appeal does not survive on merits since the Delhi Bench has considered the identical issue and ruled in favour of Revenue - But however, on limitation we are allowing the assessee s appeal on the consideration that the issue in dispute was mired in litigation and was put to rest only by the Tribunal decision in Charanjeet Singh Khanuja 2015 (6) TMI 585 - CESTAT NEW DELHI on 09.06.2005 in a batch of 38 appeals. While confirming that the activity involved would fall within the scope of BAS, the Tribunal however set aside the longer period of limitation. The extended period cannot be invoked here also. Hence, the proceedings and consequential demand get hit by limitations - Impugned order cannot then survive - appeal allowed on the grounds of limitation.
Issues Involved:
Taxability of services under Business Auxiliary Service in a Direct Selling Concept - Demand of service tax, interest, and penalties - Failure to obtain service tax registration and file ST-3 returns - Appeal against the decision upholding the demand. Analysis: Issue 1: Taxability of services under Business Auxiliary Service in a Direct Selling Concept The appeal concerns the taxability of services related to the distribution of products under the Direct Selling Concept. The Show Cause Notice (SCN) issued proposed the demand of service tax under Business Auxiliary Service due to activities undertaken by the appellant. The appellant did not deny the allegations but explained the modus operandi and brand loyalty building. The SCN highlighted the non-registration for service tax and failure to file ST-3 returns. The Commissioner (Appeals) upheld the demand, leading to the current appeal. Issue 2: Appeal on Limitation Grounds During the hearing, the appellant's counsel relied on a Delhi Tribunal decision to argue for the appeal's success based on limitation. The Revenue supported the authorities' findings, emphasizing the appellant's failure to register and file returns despite reminders. The Tribunal found that while the appeal did not succeed on merits, it allowed the appeal on limitation grounds. Referring to the Delhi Tribunal decision, the Tribunal considered the issue's resolution in a batch of appeals and set aside the longer period of limitation. Issue 3: Judicial Precedents on Limitation The Tribunal cited the Delhi Tribunal's decision and a High Court judgment in a similar dispute, emphasizing the absence of fraud or suppression by the assessee. Both rulings highlighted the existence of doubt within the Department regarding taxability, leading to the conclusion that the extended period of limitation could not be invoked. The High Court upheld the Tribunal's decision, emphasizing the lack of evidence of wilful non-compliance by the assessee. Conclusion The Tribunal allowed the appeal on limitation grounds, following judicial precedents that emphasized the presence of doubt regarding taxability and the absence of evidence of wilful non-compliance. The extended period of limitation was deemed inapplicable, leading to the appeal's success on limitation grounds. Therefore, the impugned order was set aside, and the proceedings were held to be hit by limitations, resulting in the appeal being allowed on those grounds. This detailed analysis of the judgment provides insight into the taxability issues, the grounds for appeal, and the application of judicial precedents in determining the outcome based on limitation grounds.
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