2023 (12) TMI 180 - AT - Service Tax

Levy of service tax - business auxiliary service - commission received from Amway for the period July, 2003 to March, 2005 - HELD THAT - Perusal of the material on record and also the judgment of the Tribunal in the case of Paramjit Kaur Others 2015 (6) TMI 585 - CESTAT NEW DELHI vide which the Tribunal disposed of 83 appeals by remanding the matter to original authority for de-novo adjudication. The present appeal remanded to original authority for de-novo adjudication on the same lines as was given in the bunch of appeals. The present appeal is disposed of by way of remand.

Summary

Issues Involved:
1. Liability to pay service tax under business auxiliary service.
2. Applicability of the definition of Business Auxiliary Service u/s 65(105)(zzb) read with Section 65(19) of the Finance Act, 1994.
3. Eligibility for exemption under notification no. 5/2006-ST.
4. Limitation period for demanding service tax.

Summary:

1. Liability to Pay Service Tax:
The appeal challenges the order dated 22.12.2012 by the Commissioner (Appeals) confirming the demand of service tax of Rs. 2,19,819/- along with equal penalty and interest u/s 75A, 77, and 78 of the Finance Act, 1944. The appellant, a distributor of Amway India Enterprises, was alleged to be liable for service tax on commissions received from Amway for the period July 2003 to March 2005.

2. Applicability of Business Auxiliary Service Definition:
The Tribunal considered whether the appellant's activities fell under the definition of Business Auxiliary Service u/s 65(105)(zzb) read with Section 65(19). The Tribunal referenced a previous judgment involving similar facts, where it was determined that the promotion, marketing, or sale of goods by distributors who purchase goods from Amway and sell them does not constitute a taxable service. However, the activity of identifying and sponsoring new distributors, which results in commissions based on the sales of these new distributors, was considered a taxable service.

3. Eligibility for Exemption:
The Tribunal also addressed whether the appellant could claim exemption under notification no. 5/2006-ST. It was clarified that promoting the sale of branded products does not equate to providing a branded service, thus making the distributors eligible for the exemption. This aspect was not examined by the original authority and required further adjudication.

4. Limitation Period:
Regarding the limitation period, the Tribunal noted that the appellant's failure to register for service tax or file returns did not automatically imply intent to evade tax. Given the existence of two views within the Department itself, the longer limitation period of five years was deemed inapplicable. The Tribunal held that only the normal limitation period of one year could be invoked.

Conclusion:
The Tribunal set aside the impugned orders and remanded the case to the original adjudicating authority for de-novo adjudication, directing the authority to decide the matter within three months from the receipt of the certified copy of the order. The appeal was disposed of by way of remand, following the precedent set in the case of Paramjit Kaur & others.