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TMI Blog2015 (6) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 878/2012 are the individuals or proprietary firms owned by individuals who are the distributors of Amway India Enterprises Pvt. Ltd. , New Delhi (hereinafter referred to as Amway). Amway is a company engaged in marketing and sale of consumer products and it markets its products through direct selling and for this purpose Amway appoint persons as distributors who buy the products to be marketed from Amway at Distributors Acquisition Price (DAP) and are required to sell the same at the price not exceeding the MRP fixed by the Amway for these products. Since the Distributors get the products from Amway at DAP which is the price lesser than the MRP, the difference between the sale price not exceeding the MRP and the purchase price (DAP) is the Distributors profit margin. Besides this, as per the marketing policy of Amway, a distributor is entitled to commission based on the monthly volume of purchases made by him from Amway for direct sale to the consumers or for personal consumption. This commission is linked to the volume of purchases made by a Distributor from Amway in a month. The distributors appointed by Amway can also sponsor/enroll other persons for marketing of the Amway pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinder Dhiman July, 2003 to 31.03.2006 21.06.2007 97,747/- 4. ST/522/2010 Ashok Arora 01.07.2003 to 31.03.2006 21.06.2007 2,70,546/- 5. ST/523/2010 Pradeep Kumar 01.07.2003 to 31.03.2006 10.04.2007 1,61,160/- 6. ST/524/2010 Sarabjit Singh 01.07.2003 to 01.03.2006 10.04.2007 1,61,160/- 7. ST/525/2010 Manjeet Pal Singh 01.07.2003 to 31.03.2006 21.06.2007 1,89,819/- 8. ST/257/2011 Waraich Mktg. 01.07.2003 to 31.03.2006 11.07.2007 11,40,888/- 9. ST/259/2011 Sandhu Mktg. 01.07.2003 to 31.03.2009 11.07.2007 5,55,915/- 10. ST/433/2011 Rashmi Panchnanda 01.07.2003 to 31.03.2008 17.04.2009 9,55,023/- 11. ST/473/2011 Manjeet Kaur & Ors. 01.07.2003 to 31.03.2005 11.09.2008 15,773/- 12. ST/502/2011 Shuddhatm Bharil 01.07.2003 to 31.03.2008 24.10.2008 18,69,606/- 13. ST/580/2011 Atul Sondhi 01.04.2006 to 31.03.2008 09.01.2009 3,06,391/- 14. ST/1123/2011 Paramjeet Kaur Amol 01.07.2003 to 31.03.2006 25.09.2009 1,08,052/- 15. ST/1383/2011 Rajveer Singh 01.04.2004 to 31.03.2008 13.04.2009 6,97,800/- 16. ST/1781/2011 Shekhar Chaudhary 2006-07 and 2007-08 19.03.2009 3,75,546/- 17. ST/1802/2011 Nitesh Dixit 01.07.2004 to 31.07.2008 16.10.2008 6,63,113/- 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... huddhatm Prakash Bharill, Shri Atul Sondhi, Smt. Paramjit Kaur Amole, Shri Rajveer Singh, Shri Shekhar Choudhary, Shri Nitesh Dixit, Mt. Paramjit Kaur Amole, Ms. Ritu Rastogi, Ms. Kavita Sukhija and Smt.Sangeet, Shri Deepak Batish, Shri Sanjiv Gandhi and Shri Ranjan Sachdev were dismissed, against which the present appeals have been filed, the appeals filed by Shri Ajit Singh, Pramila Singh, Sneh Lata, Sunita Singh, Shri Krishna Murari, Shri Shailendra Srivastava, Nandita Pandit, Suchi Naithani, Saurabh Saxena, Vandana Nigam, Prem Lata Singh, Sharmila Gupta, Tarun Prasad were allowed by the Commissioner, against which the Revenue is in appeals. 5. Heard both the sides. 6. Shri Kapil Kher, Sr.Advocate, Shri J.K. Mittal, Advocate, Shri Vineet Singh, Advocate, Shri Abhisek Jaju, Advocate, Shri Sidhant Jain, Advocate, Shri Nitish Garg, Advocate and Shri Kamal Gupta, Advocate, ld. Counsels representing the Appellants in appeals nos. ST/138 and 139/2009, ST/406/2010, ST/522 to 525, ST/257,259, 433,473,502,580,1123,1383,1781 & 1802/2011, ST/56, 86, 126, 645/2012 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the Rules made thereunder with intent to evade payment of service tax on the part of the assessees. For the same reasons, there is no justification for imposition of penalty on the assessees under Section 76, 77 and 78 of the Finance Act, 1994. 7. Shri Gobind Dixit, ld. Departmental Representative, defended the findings of impugned orders of the Commissioner (Appeals) in respect of appeal nos. ST/138 and 139/2009, ST/406/2010, ST/522 to 525, 257,259, 433,473,502,580,1123,1383,1781 & 1802/2011, ST/56, 86, 126, 645/2012 and ST/1723-1724, 2337 and 2810/2012 filed by the Distributors and assailed the impugned orders of the Commissioner (Appeals) reiterating the grounds of appeals in respect of appeals nos. ST/851 to 854, 863, 864, 865, 866, 867, 868, 869, 870 and 878/2012 filed by the Revenue. He emphasized that the activities of the Distributors of Amway in these cases is covered by the definition of Business Auxiliary Service under Section 65(105)zzb read with Section 65(19)(i) of the Finance Act, 1994 and in this regard, he cited the judgement of the Tribunal in the case of (a) Shri Surendra Singh Rathore & Ors. Vs. CCE, Jaipur-I reported in 2013 (3)ECS 224 (Tribunal-Delhi) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 139/2009, ST/406/2010, ST/522 to 525, 257, 259, 433,473,502,580,1123,1383,1781 & 1802/2011, ST/56, 86, 126, 645/2012 and ST/1723-1724, 2337 and 2810/2012 and the respondents in the appeals nos. ST/851 to 854, 863, 864, 865, 866, 867, 868, 869, 870 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 DistributionsAcquisition 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment, the activity of the assessees is promotion or marketing or sale of the goods produced or provided by or belonging to the client.In our view, the activity which is covered under Section 19(i) is in relation to 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Another objection raised by the appellants in appeals nos. ST/138 and 139/2009, ST/406/2010, ST/522 to 525/2010, ST/257,259, 433,473,502,580,1123,1383,1781 & 1802/2011, ST/56, 86, 126, 645/2012 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 assesses are individuals and during the period till 30.04.2006, 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 concernin 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 individ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the jurisdictional central excise authorities, it cannot be inferred that this was a wilful act with intent to evade payment of service tax. We also take notice of the fact that in respect of appeals filed by the Revenue, the Commissioner (Appeals) after analyzing the activities of the assesses had taken the view that the same is not covered by the definition of Business Auxiliary Serviceunder Section 65(105) (zzb) read with Section 65(19) of the Finance Act, 1994. When on the issue involved in this group of cases, there were two views in the Department itself, it cannot be said that on the question as to whether the activity of the assessees was taxable under Section 65(105)(zzb) read with Section 65(19) of the Finance Act, 1994, there was no scope for doubt. As held by the Apex Court in the case of Continental Foundation Joint Venture Vs. CCE, Chandigarh reported in 2007 (216) ELT 177 (SC) when there is scope for doubt in the mind of an assessee on a particular issue, the longer limitation period, under proviso to Section 11 A(1)cannot be invoked and in our view, the ratio of this judgement of the Apex Court is applicable to the facts of these cases. Therefore, the longer limita ..... X X X X Extracts X X X X X X X X Extracts X X X X
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