TMI Blog2016 (2) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... All the three appeals are taken up together for disposal since the issues involved in these appeals are identical in nature. 2. The brief facts of the case are that the appellants undertook promotion/marketing/sale of goods belonging to M/s. Amway India Enterprises, New Delhi. The period involved in all the three appeals is 01.10.2003 to 30.04.2006. The details regarding the period of dispute, date of SCN issued and the amount involved in all the three appeals are as under:- Sl. No. Appeal No Appellant Vs. Respondent Period of dispute SCN dated ST Amount in Rs. 1 ST/362/2010 A. Vijaya v. CCE 01.10.2003 to 30.04.2006 17.04/2009 4,86,489 2 ST/422/2010 K. Srinivasan v. 01.10.2003 to 30.04.2006 04.02.2009 4,95,669 3 ST/423/2010 M. Sundaravadivel v. CCE 01.10.2003 to 30.04.2006 15.04.2009 12,82,365 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand on the profit earned by the distributors from sale of goods in retail which had been purchased by them from Amway and on the commission earned by them every month on purchases of certain quantum of goods from Amway. 5. On the other hand, the Ld. AR reiterates the findings of the OIA and submits that the appellants are not only made retail sale of direct marketing but they are also engaged in sales promotion on behalf of Amway by appointing 2nd line and 3rd line distributors which is directly covered under the BAS for sales promotion. He relied para 13 14 of the Tribunals Principle Bench Order. 6. We have carefully considered the submissions made by both sides and the short issue involved in this case relates to the demand of service tax under BAS on the commission amount received by the appellants from Amway India Enterprises under multilevel marketing scheme (Direct Marketing). The adjudicating authority has demanded service tax on the gross amount of commission received from Amway India Enterprises. We find that these goods are not sold on the shelf but was sold only through chain of distributors by way of direct marketing. The price on which the goods are sold is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the gross amount of commission received by each of the Distributors (assessees) of Amway during the period of dispute, as mentioned in the Chart in para 2 above. The departments 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 pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distributors from sale of the goods in retail which had been purchased 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 volum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a of the Department is not correct, as in these cases 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-ST. In this group of cases, the eligibility of the Distributors (assessees) for the exemption notification no.6/2005-ST 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 assesses that there was absolutely no suppression or misstatement 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 Departments contention, on the other hand, is that the assesses neither obtained servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quarely applicable to the present case as the issue in the present case is identical and service tax was demanded on the commission received from M/s. Amway India Enterprises Pvt. Ltd. As the issue has been agitated all over India and service tax was demanded on sale of goods by the Amway distributors, the Tribunal in the above order categorically held that though the service tax is not liable to be paid on the profit earned by the distributors from sale of goods in retail. Whereas the commission earned by the appellant on the basis of the volume of purchases of Amway products made by his sales group i.e. group of second level of Distributors appointed by Amway on being sponsored by the Distributor is liable for service tax. In the present case also the adjudicating authority has confirmed the service tax demand on the gross amount received as commission by the appellants, which involved both the commission received by the appellants on direct retail sale as well as the commission received for the sale of goods through the second level and third level distributors. The adjudicating authority has also not examined the applicability of the exemption Notification No. 6/2005-ST. 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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