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2020 (10) TMI 730 - AT - Service TaxClassification of services - Business Auxiliary Services or not - Sales Promotion Agency - extended period of limitation - penalties - HELD THAT:- “Business Auxiliary Service” is defined during the relevant period included the services related to promotion or marketing or sales of goods produced or provided by or belonging to the client. The agreements which have been entered into clearly state that the appellant has been employed as a promoter of the products of their clients - It is true that there is only one customer viz; APBCL in the State of Andhra Pradesh who purchases IMFL from various distilleries and in turn would sell it in retail. Therefore, it is in the interest of every distillery to ensure that they sell more to the customer of APBCL. This is sought to be done, inter alia, by close coordination with the retailers, to ensure maximum quantities of their client’s products are ordered by the retailer from the depots of APBCL. For this purpose, they need to promote and market their goods to the sole customer. The Promoter i.e. the appellant got paid at ₹ 8/- per case as service charges on the secondary sales of their brands during the period of agreement. All these factors make it abundantly clear that not only is the agreement titled as sales promotion agreement but the responsibilities of the appellant or that of sales promotion, there may be some other related incidental responsibilities and the payment to the appellant is based on the sales of the products. Although there is only one wholesale buyer, APBCL, their orders depend on the orders which the retailers place on the depots of APBCL. The appellant was specifically required to ensure that the retailers place maximum quantities of the client’s products on APBCL depots. Thus, the services rendered by the appellant are in the nature of promotion and marketing of the clients’ products - the appellant is liable to pay service tax under “Business Auxiliary Services” for the services rendered by them. Extended period of Limitation - Penalty - HELD THAT:- The appellant has not taken the registration nor disclosed the nature of their activities to the Service Tax Department at any stage. It is only on the basis of specific intelligence and follow up of investigations that it has come to the light that the appellant was rendering Business Auxiliary Services and has neither obtained registration nor filed returns nor has paid any service tax whatsoever - the appellant has suppressed these facts and therefore the invocation of extended period of limitation under Section 73 is correct and proper. Consequently, the confirmation of interest is also liable to be upheld - penalties also upheld. Appeal dismissed - decided against appellant.
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