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TMI Blog2018 (8) TMI 1114X X X X Extracts X X X X X X X X Extracts X X X X ..... BLE MR. RAMESH NAIR, MEMBER ( JUDICIAL ) And HON BLE MR. RAJU, MEMBER ( TECHNICAL ) For the Appellant: Shri Anil K. Kher ( Advocate ) For the Respondent: Shri K.J. Kinariwala ( AR ) ORDER Per : Ramesh Nair The issue involved in the present case is that whether the appellant being distributors of Amway India Enterprise Pvt. Ltd. is liable to pay the service tax on the gross amount of commission received by the distributors. 2. Sh. Anil Kher Ld. Counsel appearing on behalf of the appellant at the outset submits that the very same issue has been considered in case of number of distributors by Delhi Bench in the case of Charanjeet Singh Khanuja Vs. CST, Indore/ Lucknow/ Jaipur/ Ludhiyana 2016 (41) STR 213 Tri-Del), wherein the principle was laid down that which commission will attract the service tax and which will not, since the demand made on the consolidated amount, for the purpose of verification and re-quantification, the matter was remanded to the adjudicating authority. He prays for following the same judgment. 3. Sh. K. J. Kinariwala Ld. Assistant Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mway during the period of dispute, as mentioned in the Chart in para 2 above. The department s contention is that these commission received by the assessees from Amway are in respect of the Business Auxiliary Service provided by them to Amway. On the other hand, the contention of the assessees is that their activity is not covered by the definition of Business Auxiliary Service as given under Section 65(105)(zzb) read with Section 65(19) of the Finance Act, 1994. 11. In terms of Section 65(105)(zzb), the service provided to a client by Commercial concern in relation to the Business Auxiliary Service is taxable. The term Business Auxiliary Service is defined under Section 65(19) of the Finance Act, 1994 as under:- Section 65(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 Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, service in relation to promotion or marketing of service provided by the client includes a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by them from Amway and on the commission earned by them every month on purchase of certain quantum of goods from Amway. 13. However, activity of a Distributor of identifying other persons, who can be roped in for sale of the Amway products/marketing of the Amway products and who on being sponsored by that Distributor are appointed by Amway as second level of distributors is, in our view, the activity of marketing or sale of the goods belonging to Amway and the commission received by the Distributor from Amway, which is linked to the performance of his sales group (group of the second level of distributors appointed on being sponsored by the Distributor) would have to be treated as consideration for Business Auxiliary Service of sales promotion provided to Amway. Therefore, service tax would be chargeable on the commission received by a Distributor from Amway on the products purchased by his sales group. However, in the impugned orders Service tax has been demanded on the gross amount of commission and no distinction has been made between the commission earned by a Distributor from Amway based on his own volume of purchase from Amway and the commission earned by him on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the distributors are engaged in promoting sales/marketing of the products of Amway and they are not marketing or promoting any taxable service which is branded and the brand name belongs to another person. Marketing or sale promotion of branded products by a person/ commission agent does not amount to providing branded service by him and hence, marketing or sales promotion of a branded product does not come under the exclusion category as mentioned in the proviso to Notification No. 6/05-S.T. In this group of cases, the eligibility of the Distributors (assessees) for the exemption Notification No. 6/2005-S.T. has not been examined and for this purpose also, these matters have to be remanded to the Original Adjudicating Authority. 16. Another plea raised in these appeals is regarding limitation. It is the contention of the assessees that there was absolutely no suppression or mis-statement of facts or deliberate contravention of the provisions of the Finance Act, 1994 or of the Rules made thereunder with intent to evade payment of Service tax. The Department s contention, on the other hand, is that the assessees neither obtained service tax registration nor did they declare th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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