Date – 12 August 2022

Facts

• The appellant, M/s. Tanima Free Network Marketing Private Limited is dealing with M/s. Amway India Enterprises Pvt.Ltd. and M/s.Britt Worldwide India Pvt. Ltd.
• A Show Cause Notice dated 30.09.2011 was issued by invoking the extended period of limitation demanding Service tax of Rs.12,52,320/- for the period 2006-07 to 2010-11 under the category of ‘Business Auxiliary Service’ alleging that the amount has been received by the Appellant as commission from Amway and Britt.
• Vide Order-in-Original demand of Rs.12,23,525/- was confirmed and appropriated from the amount already paid by the assessee. The Adjudicating authority however refrained from imposing any penalty by applying Section 80 of the Finance Act, 1994. The Department was in appeal before the First Appellate Authority praying for imposition of penalties and the Appeal of the Department was allowed and penalties were imposed. 
• The Appellant contended that there were different views on whether commission received by an individual from Amway or Britt or any such network marketing company was liable to Service Tax or not and therefore the extended period of limitation is not applicable in the present case.
• Being aggrieved, the Appellant is in appeal before the Tribunal.  

Issue

• Whether penalty is imposable in respect to the demand for Service Tax under the category of ‘Business Auxiliary Service’ sustainable?

Order

• The authorities found force in the submission of the Appellant that Service tax in respect to the commission in dispute was already been paid along with interest before issuance of Show Cause Notice and therefore the proceedings should have been concluded.
• Therefore, the Tribunal set aside the penalties.