SHRI SURENDRA SINGH RATHORE Vs. CCE

JUDGEMENT

(1.) UNDER Section 65(19)(i) of the finance Act, 1994 Business Auxiliary Service means any service in relation to promotion or marketing or sale of goods produced provided by the client. Revenue proceeded against the assessee for having provided Business Auxiliary Service; for failure to obtain registration and filing returns disclosing amounts received from the taxable service. Show Cause Notice dated 30.08.2010 was issued alleging evasion of service tax to the tune of Rs. 45,579/ -, for the period 01.02.2008 to 31.03.2010, besides proposing levy of interest and penalties under relevant provisions of the Finance Act, 1994 (the Act). After consideration the petitioners objections to the Show Cause Notice and providing a personal hearing, the adjudicating authority confirmed the demand of Rs. 45,579/ -, along with interest under Section 75 and penalty under Section 77. The specified penalty under Section 78 was also imposed besides penalty under section 76 of the Act. Aggrieved, the assessee preferred an appeal which was rejected by the Commissioner Central Excise (Appeals) Jaipur -ii vide order dated 29.03.2011. The appellate authority concurred that the appellant had provided the taxable Business Auxiliary Service; had deliberately failed to obtain registration; had failed to file returns; nor had remitted service tax on the commission received from M/s Fashion Suitings Pvt. Ltd., Bhilwara Rajasthan (for short FSL), for providing the Business Auxiliary Service of promotion and marketing of FSL products. Aggrieved by the appellate order, this appeal is preferred.

(2.) A similar demand of service tax of Rs. 1,60,926/ - along with interest and penalties under Sections 76, 77, 78 of the Finance Act, was confirmed against Smt. Chanda Bohra vide Order -in -Original No. 26/2010 -2011(ST) dated 24.10.2010. The appeal filed by her before Commissioner (Appeals) was rejected vide Order -in -Appeal No. 172 (CB) ST/JPR -II/2011 dated 31.03.2011. She has also challenged the appellate order.

(3.) THE agreement between the appellants and FSL was for the purpose of selling the company's product as per the RCM Business Marketing Plan (RCM stands for Right Concept Marketing Plan). According to terms and conditions of the agreement between the parties, FSL issues a scratch card having a password along with a standard product Kit of the Products by charging a price for same. Any person can submit an application through the internet using password and after acceptance becomes a distributor of the company for the purpose of selling the company's product under the RCM plan. Minimum purchases in terms of RCM products prescribed by the company from time to time is compulsory for a distributor during the month in which he desires to have the commission credited in his account. Company is obligated to remit consideration to the distributor for selling the company's product as per terms of conditions specified in the RCM Business Marketing Plan of the company. Particulars of the RCM Business Marketing Plan have been set out in the adjudication order. As per this plan a distributor gets commission on the supply made by FSL and also a share in the commission for introducing new customers, after such distributor propagates/promotes FSL products under share your views with your friends and relatives concept. Thereafter, when a new customer starts using FSL products they in turn will propagate/promote FSL products to other persons and the distributor gets commission in respect of purchases made by such introducees, down the line. He shares the commission with others on such purchases. Consequently FSL sales are boosted.