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TMI Blog2025 (4) TMI 1395X X X X Extracts X X X X X X X X Extracts X X X X ..... ission and 3. Leadership Development Commission. Based on scrutiny of third party data viz., Form 26AS, the department observed that the appellant was engaged in providing taxable services in the category of "Business Auxiliary Service" and allied services, without obtaining requisite registration and without payment of service tax. On completion of investigations, Show Cause Notice No. C. No. IV(11)108/Gr. VII/TP/HKM/BKN/2016/3971 dated 07.12.2016 was issued to the appellant proposing recovery of service tax amounting to Rs. 4,85,669/- on the commission received from Amway during the period FY 2011-12 to FY 2015-16, in terms of proviso to Section 73(1) of the Finance Act, 1994 along with interest and proposing penalty. Vide Order-in-Original No. 01/2018-ST(Demand)-Asstt. Commr. dated 15.01.2018, the demand of Rs. 4,34,045/- was confirmed, extending the cum tax value benefit claimed by the appellant and ordering for its recovery along with interest under Section 75. Rs. 1,08,353/- which had already been deposited by the appellant was appropriated. A penalty of Rs. 4,34,045/- i. e. equal to the amount of Service Tax was also imposed under Section 78 of the Finance Act, 1994. In addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ghaziabad 2007 (210) E.L.T. 183 (S.C.) and Assistant Collector of Central Excise vs. Bata India Ltd. 1996 (84) ELT 164 (S.C.) are not relevant to present case as said judgements were rendered in the context of pre- amended Section 4 of the Central Excise Act, 1944, where, assessable value was based upon wholesale price and not transaction value as per the amended Section 4. Learned counsel relied on paras 4 & 8 of the decision in the case of Hi-Line Pens Ltd. Vs CCE & ST, Delhi 2007 (210) E.L.T. 183 (S.C.). 5. Learned Authorized Representative for the Department submitted that the appellant in the present case was a distributor, who purchases goods from Amway at the Distributors Acquisition Price (DAP)) and sells the same in retail at price not exceeding MRP fixed by the Amway. This activity of the Distributor, cannot be treated as promotion, marketing or sale of the goods produced or provided by or belonging to the client (Amway), as the sale of the goods purchased by the Distributor from Amway is not the sale of the goods belonging to her client, i. e. Amway. Ld. AR stated that the amount of 'Personal Performance Commission' received by the appellant is clearly excludibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 878/2012 filed by the Revenue are distributors of Amway India Enterprises Pvt. Ltd. Amway operate their business of selling of their products under a Business Plan called Multi- Level Marketing. As per the "Business Starter Guide of Amway India Enterprises Pvt. Ltd." placed on record, they appoint Distributors, who purchase their products and sell the same at the price not exceeding the MRP fixed by the Amway. The Distributors, in turn, can sponsor a second level of distributor who are also appointed as distributors by Amway and besides selling the Amway products purchased Amway, they also promote the marketing of the Amway products. As per the Amway Business Plan, a distributor has three streams of income - (a) a distributor of Amway products purchases the products from Amway at the Distributions‟ Acquisition Price (DAP) and sells them in retail at the price not exceeding the MRP as fixed by the Amway. The difference between the retail sale price and the DAP is the Distributor‟s profit margin. (b) Besides above, the Distributor also gets a commission from Amway from 6% to 21% depending upon the purchases of Amway products during the month for sale or for personal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the promotion or marketing or sale of the goods produced by the client or provided by the client or belonging to the client. This expression, in our view, would not cover the sale of the goods by a person, which belong to him, as the activity of the promotion or marketing or sale of the goods by a person belonging to him would not constitute service. The assessees in these cases are distributors, who purchase the goods from Amway at the Distributors‟ Acquisition Price (DAP)) and sell the same in retail at price not exceeding MRP fixed by the Amway. This activity of the Distributors, in our view, cannot be treated as promotion, marketing or sale of the goods produced or provided by or belonging to the client (Amway), as the sale of the goods purchased by the Distributors from Amway is not the sale of the goods belonging to their client - Amway. Once the Amway products have been purchased by a Distributor from Amway, those products cease to belong to Amway, but belong to the Distributor and sale of these goods by the Distributor would not constitute service to Amway. For the same reason, any incentive or commission received by a Distributor from Amway for buying certain quant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 012 and ST/1723-1724, 2337 and 2810/2012 and the respondents in Appeals Nos. ST/851 to 854, 863, 864, 865, 866, 867, 868, 869, 870 and 878/2012 is that the assessees are individuals and during the period till 30-4-2006, Service tax was chargeable only on the services provided to a client by a commercial concern in relation to Business Auxiliary Service and the individual persons cannot be treated as Business concern. We do not accept this plea as a business concern can be a proprietary firm also which is owned by an individual and there is no difference between proprietary firm owned by a person and that person. When an individual engages himself in a commercial activity, he has to be treated as business or commercial concern. Therefore, notwithstanding the fact that w.e.f. 1-5-2006 the term, „commercial concern‟ in Section 65(105)(zzb) was replaced by „any person‟, we are of the view that even during the period prior to 1-5-2006, the Business Auxiliary Service, even if provided by an individual to a client, was taxable. Moreover, in this group of appeals, the Appellants in Appeal No. ST/257/2011 and ST/259/2011 are proprietary firms who, without any doubt, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvations of this Court in Hindustan Sugar Mills v. State of Rajasthan and Ors., [1978] 4 SCC 271, at page 280, as follows: "Take for example, excise duty payable by a dealer who is a manufacturer. When he sells goods manufactured by him, he always passes on the excise duty to the purchaser. Ordinarily it is not shown as a separate item in the bill, but it is included in the price charged by him. The 'sale price' in such a case could be the entire price inclusive of excise duty because that would be the consideration payable by the purchaser for the sale of the goods. True, the excise duty component of the price would not be an addition to the coffers of the dealer, as it would go to re-imburse him in respect of the excise duty already paid by him on the manufacture of the goods. But even so, it would be part of the 'sale price' because it forms a component of the consideration payable by the purchaser to the dealer. It is only as part of the consideration for the sale of the goods that the amount representing excise duty would be payable by the purchase:. There is no other manner of liability, statutory or otherwise, under which the purchaser would be liable to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore, it cannot be said that there was an intention to evade service tax. The said issue arose only because Amway called such amount as 'commission' whereas the appellant simply sold the goods to the person who asked a product at a particular MRP. In this regard, we note that the Hon'ble Supreme Court in the case of Continental Foundation Joint Venture v. CCE, Chandigarh [2007 (216) E.L.T. 177 (S.C.)] held that when there is scope for doubt in the mind of an assessee on a particular issue, the longer limitation period, under proviso to Section 11A(1) cannot be invoked. In the instant case, it is apparent that the appellant was in doubt regarding the leviability of service tax on the said transactions as she was under the impression that she was simply selling the goods at a higher MRP. We are of the opinion that the ratio of this judgement is applicable to the facts of this case. Therefore, the extended limitation period of 5 years under proviso to Section 73(1) of the Finance Act, 1994 cannot be sustained. Accordingly, the penalty equivalent to duty is also set-aside. 11. In view of the above discussions, we uphold the demand on commission for the normal period, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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