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ST – Benefit of Notfn 06/2005-ST is admissible to distributor engaged in promoting/ marketing of Amway products as they are not marketing or promoting any taxable service under a ‘brand name’: CESTAT

2019-TIOL-2510-CESTAT-DEL

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
COURT NO. 1

Service Tax Appeal No. 50478 of 2016[DB]

Arising out of Order-in-Original No. JOD-EXCUS-000-COM-0002-15-16, Dated: 06.05.2015
Passed by Commissioner (Appeals) CGST Customs & Central Excise, Indore

Date of Hearing: 15.04.2019
Date of Decision: 15.04.2019

BAJRANG LAL
212, DHANIYAN VIJAYPUR, TEHSIO-LAXMANGARH
SIKAR, RAJASTHAN

Vs

COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX
JODHPUR HQ AT JAIPUR NEW CR BUILDING
C SCHEME, JAIPUR
RAJSTHAN-302005

Appellant Rep by: Ms Priyanka Goel, Adv.
Respondent Rep by: Shri R K Manjhi, AR

CORAM: Dilip Gupta, President
Bijay Kumar, Member (T)

ST – The assessee had filed a declaration, in the form of VCES-1 under Service Tax VCES, 2013 – In the said declaration the assessee has declared tax dues for period April, 2011 to December 2012 and submitted the details/ calculation of tax liability, copy of form ST-2 along with Income Tax report, Income and Expenditure Accounts and Balance Sheet, Form-16 and AS 26 for the financial year to 2010-11, 2011-12 and 2012-13 in support thereof – The assessee has also deposited the admitted service ‘tax dues’ – The Department scrutinised the declaration submitted by assessee and came to conclusion that the assessee has not correctly declared the ‘tax dues’ in terms of VCES to the extent that they have received commission from M/s Tulip Global Private Limited for which they are not entitled for threshold exemption in terms of Notfn 06/205-ST as amended in as much as they have provided the ‘branded service’ – The issue at hand is squarely covered by decision of Charanjeet Singh Khanduja 2015-TIOL-1205-CESTAT-DEL wherein it has been held that the benefit of Notfn 05/2006-ST would be admissible to the distributor engaged in promoting/ marketing of the product of Amway as they are not marketing or promoting any taxable service under a brand name – The assessee is entitled for the benefit of said Notfn 5/2006-ST as the exemption Notification is available to the noticee – The ‘tax dues’ declared by assessee under VCES is appropriate – The impugned order is, therefore, not sustainable: CESTAT

Appeal allowed

Case law cited:

M/s Charanjeet Singh Khanduja and Others. vs CST, Indore – 2015-TIOL-1205-CESTAT-DEL… Para 3

FINAL ORDER NO. 50597/2019

Per: Bijay Kumar:

1. This order seeks to assail the Order–in-Original No. JOD-EXCUS-000-COMM-002 dated 30.04.2015 (herein after refer to as impugned order). In the impugned order learned Commissioner has confirmed the demand raised against the appellant issued vide Show Cause Notice dated 02/12/2014.

2. The brief fact of the case is that the appellant is registered with the Service Tax Department and had filed a declaration, in the form of VCES-1 on 25/12/2013, with the office of the Designated Authority i.e. Assistant Commissioner of Central Excise and Service Tax Division, Sikar (Rajasthan) under the Service Tax Voluntary Compliance Encouragement Scheme, 2013 (hereinafter refer to as VCES). In the said declaration the appellant has declared ‘tax dues ‘for period April, 2011 to December 2012 and submitted the details/ calculation of tax liability, copy of form ST-2 dated 23/12/2013 along with Income Tax report, Income and Expenditure Accounts and Balance Sheet, Form-16 and AS 26 for the financial year to 2010-11, 2011-12 and 2012-13 in support thereof. The appellant has also deposited the admitted service ‘tax dues’ amounting of Rs. 1,47,522/-. The Department scrutinised the declaration submitted by the appellant and came to the conclusion that the appellant has not correctly declared the ‘tax dues’ in terms of VCES to the extent that they have received commission from M/s Tulip Global Private Limited for which they are not entitled for the threshold exemption, in terms of Notification No. 06/205-ST dated 01/03/2005 as amended in as much as they have provided the ‘branded service’. Learned Commissioner, while adjudicating the case has held that the appellant has made a declaration which is substantially false, and therefore, the proceedings have rightly initiated under Section 111 of the Scheme.

3. Learned Advocate on behalf of the appellant submits that the appellant is engaged in providing service of ‘multi level marketing’ business and has received commission from M/s Tulip Global Private Limited, for products distributed by them. It was also submitted that the appellant is not promoting or marketing any branded services of M/s Tulip Global Private Limited, and therefore, they have rightly availed the benefit of the SSI exemption Notification No. 06/2005-ST(supra). Learned Advocate also submits that the present case is squarely covered by the decision of Hon’ble Tribunal Delhi in case of M/s Charanjeet Singh Khanduja and Others. vs CST, Indore/ Lucknow/ Jaipur/ Ludhiana and others[ 2015 (6) TMI 585-Cestat New Delhi]. = 2015-TIOL-1205-CESTAT-DEL

4. In view of above it is submitted that the impugned order is not sustainable and liable to be set aside.

5. Learned Authorised Representative on behalf of the Revenue reiterates the grounds contained in the impugned order for confirmation of the demand against the appellant.

6. We have heard both sides and perused and appeal records, We find that the issue at hand is squarely covered by the decision of Charanjeet Singh Khanduja (supra) wherein it has been held that the benefit of Notification under 05/2006-ST would be admissible to the distributor engaged in promoting/ marketing of the product of Amway as they are not marketing or promoting any taxable service under a brand name. The relevant paragraph of the decision is reproduced as under;

15. Another point of dispute is as to whether duty exemption under Notification No. 5/2006-ST would be admissible to the Distributor in this group of cases. In this regard, the Department plea is that this exemption is not applicable when the taxable service is provided by a person under a brand name/trade name, whether registered or not, of another person and in this group of cases, the Distributors have promoted the sale/marketing of branded products. This plea 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 products 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 (assessee) for the exemption Notification No. 06/2005-ST has not been examined and for this purpose also, these matters have to be remanded to the Original Adjudicating Authority.

7. We are, therefore, of the opinion that the appellant is entitled for the benefit of Notification No. 5/2006-ST(supra) as the exemption Notification is available to the noticee. The ‘tax dues’ declared by the appellant under VCES is appropriate. The impugned order is, therefore, not sustainable.

8. In view of above, the impugned order is set aside and the appeal is allowed with consequential benefit.

(Operative part pronounced in open court)

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