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TMI Blog2015 (9) TMI 831X X X X Extracts X X X X X X X X Extracts X X X X ..... ch incentives and commissions. Thus the, adjudicating authority has rightly held that the activities carried out by the appellants are covered under the category of Business Auxiliary Services and thus are taxable. - Decided against the assessee. Extended period of limitation - Held that:- they neither supplied any data regarding providing of such services to the department, nor they fulfilled statutory obligations and this act of appellants was entirely unwarranted which resulted into gross violation of law governing the issue as well as Revenue loss to the Government exchequer. Therefore, suppression with intent to evade Service Tax is clearly spelt out. - Demand of service tax with penalty confirmed - Decided against the assessee. - Order-in-Appeal Nos. JAL-EXCUS-000-APP-328-329/2013-2014 - - - Dated:- 14-3-2014 - Shri Anil Kumar Gupta, Commissioner (Appeals) Shri Vikrant Kackria, Advocate, for the Assessee. ORDER Sr. No. of Appeal Appeal No. OIO appealed against Amount of Service Tax involved Period Involved 1. 104/AP/ST/CHD-I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nner and in consideration of above service, a distributor gets various kind of incentives, commission, royalty, leadership bonus and technical bonus in a pre-defined manner depending on kit purchases and repurchases by his/her down-liners. 2.1 The services provided by a distributor in above manner are classifiable as Business Auxiliary Services and are chargeable to Service Tax. In response to enquiry, M/s. FSL vide letter dated 28-2-2011 4-8-2011 supplied information regarding commission paid to the distributors of company in the state of Punjab. The appellant received commission amounting to ₹ 12,53,443/- and ₹ 1,64,713/-, on account of marketing services during the period October, 2008 to September, 2010 and October, 2010 to March, 2011 involving Service Tax of ₹ 1,35,792/- ₹ 16,966 /- respectively. Accordingly, show cause notice dated 18-4-2011 and 30-3-2012 was issued for recovery of Service Tax along with interest and also for imposition of penalties under Sections 77 78 of the Act. 2.2 In the adjudication proceedings, the Adjudicating Authority vide impugned orders confirmed the demand of Service Tax of ₹ 1,35,792/- ₹ 16,96 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided by the Client; that the appellant was purchasing goods and working as independent vendor, the activity undertaken by the appellant could not be treated as in relation to any customer care service provided on behalf of the client; or in relation to procurement of goods or services, which are inputs for the client; or in relation to production of processing of goods for, or on behalf of the client; or in relation to provision of service on behalf of the client; or in relation to management or supervision; that since the relation between M/s. FSL and the appellant was of a buyer seller and not of service provider service recipient as discussed above, it was contrary to the statutory provisions of law to suggest/hold that the appellant is providing any service in relation to promotion or marketing or sale or goods produced or provided by or belonging to the client; that the activity undertaken by the appellant was not covered in any of the limb of the definition of Business Auxiliary Service and allegation of acting as Commission Agent was out of the preview of the show cause notice as well as impugned order, the Appellant was not liable to pay any Service Tax, the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... qualify the activity of the appellant as Business Auxiliary Service is present and it is contrary to the statutory provisions of law to hold that the appellant has provided any service in relation to promotion or sale of goods produced or provided by or belonging to the client. 7. Now, the issue to be decided in this case is whether the activities as alleged in the show cause notice can be treated as promotion or marketing or sale of goods produced or provided by or belonging to the client and are covered under category of Business Auxiliary Services or not. As per Section 65(19) of the Finance Act, 1994, the Business Auxiliary Services is defined as under :- (19) Business Auxiliary Service means any service in relation to : (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client; or (iii) any customer care service provided on behalf of the client; or (iv) procurement of goods or services, which are inputs for the client; Explanation:- For removal of doubt, it is hereby declared that for the purposes of this sub-clause, inputs mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany s products. The appellant, in terms of conditions, was required to make minimum purchases in terms of value of RCM products prescribed by the company from time to time, which was compulsory for a distributor. Further, as per the concept of marketing, the appellant has also sponsored other members and thereafter his down liners automatically formed with the introduction of new distributors by the persons sponsored by the appellant. 8.1 The appellant has mainly argued that they are not in any way promoting the business of M/s. FSL but were doing sale and purchase of goods of M/s. FSL to earn profits. Also the relationship between Ms. FSL and the appellant is of a buyer and seller and not of service provider service recipient the levy of Service Tax was not attracted. In this regard, it is observed that from the facts narrated above, the appellant is clearly working for M/s. FSL as their distributor for promoting and marketing their products and has sponsored new distributors, who further sponsor new distributors. In this way, a chain of distributors is formed which helped in the promotion and marketing of the products belonging to M/s. FSL. The appellant has received commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant s own case for prior period i.e. 2004-05 to 2007-08 (up to September, 2008) which was decided by the undersigned vide Order-in-Appeal No. 78/Appl/ST/CHD-II/2012, dated 20-3-2013, the appeal was partially allowed by setting aside penalty imposed under Section 76 of the Act. As far as issue on merit was concerned, the said appeal was rejected on that account. Further, I find from the above figures that during the financial years 2009-10 2010-11, the total commission received by the appellant was below the thresh hold exemption limit provided for the respective financial years under Notification 06/2005-S.T., dated 1-3-2005. Further, I also find that it has not been alleged in the show cause notice that the services provided by the appellant were branded services. Therefore, I hold that the appellant is eligible for small service exemption for the year 2009-10 2010-11. Further, I hold that since the appellant is eligible for small services exemption for the year 2009-10 2010-11, the Service Tax demand pertaining to the said period is not sustainable being taxable value below the exemption limit. However, the demand for the period 2008-09 sustains against the appellant as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard, I place reliance on the order of the Hon ble High Court of Gujarat dated 22-4-2010 in the case of Commissioner of Central Excise, Surat-I v. Neminath Fabrics Pvt. Ltd. - 2010 (256) E.L.T. 369 (Guj.) in which it was held that the concept of knowledge of the department is entirely absent from Section 11A and importing of the said concept therein would tantamount to rewriting statutory provision and rendering defined term relevant date nugatory. I find that there are five ingredients such as fraud, collusion, wilful misstatement, suppression of facts and contravention of any of the provisions or rules made there-under under Section 73(1) of the Act and if anyone or more ingredients are present, then the limitation of extended period is invoked. I find that all the five ingredients/reasons stipulated in the above said proviso are independent and mutually exclusive and if anyone or more of the five ingredients/reasons is/are there, the limitation of extended period as provided under proviso to Section 73(1) of the Act is invokable as held in the case cited supra. Therefore, due to suppression and intent to evade Service Tax on the part of the appellants, provisions of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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