Business Auxiliary Service was defined under Section 65 (105) (zzb) read with Section 65(19) of the Finance Act, which aimed to mainly bring 'Commission Agents' under the ambit of Service Tax. Any person who acts on behalf of another person and causes sale or purchase of goods, or provision of goods, provision or receipt of services for a consideration would covered under the definition. The definition of Business Auxiliary Services comprises of several clauses for the purpose of taxing the persons by mentioning the specific clause under which the services have been provided by such persons. Basically, the purpose of the aforesaid sub-clauses in the definition, was to clearly indicate to the person providing the taxable service about the nature of service provided by him and why the demand was made under the head of 'Business Auxiliary Service', by mentioning the specific clause under which the services provided by him would be covered. Also, the department for proposing the demand of service tax against the assessee under the category of 'Business Auxiliary Service,' was required to mention the clause in the definition under which the services provided by the assessee would fall. The allegation or charge against the assessee while issuing the SCN has to be very clear and therefore, for raising the demand under the head of 'Business Auxiliary Service', specific sub-clause had to be mentioned under which the services provided by the assessee fell. Non-mentioning of sub-clause would lead to issuance of a vague & incoherent show cause notice and consequently, a vague adjudication order, which will be bad in law and non-maintainable.
A matter was argued by our team before the Hon'ble CESAT Chandigarh, wherein the assessee/appellant was engaged in providing Marketing Service/Distributorship and promotion of health care products of M/s Daeshan Trading India Pvt. Limited and also working as distributor of M/s DTI. The work of the appellant was to canvas for merits of becoming an agent/distributor of M/s DTI and to enrol new agents/distributors. The department took a view that the services provided by the Appellant are taxable under the category of 'Business Auxiliary Services.' On the behalf of Appellant, it was argued by our team that the show cause notice was issued without mentioning the specific sub-clause as prescribed under the definition of 'Business Auxiliary Services', therefore, it is flawed. Reliance was placed on the decisions of Kalpataru Power Transmission Ltd. – 2023 (69) GSTL 54 (Tri. - Ahmedabad); Forward Resources Pvt. Limited – 2023 (69) GSTL 76 (Tri. – Ahmd.); Swapnil Asnodkar – 2018 (10) GSTL 479 (Tri. – Mumbai); Balaji Enterprises – 2020 (33) GSTL 97 (Tri. – Del.). Further, relying on few decisions on the issue, it was submitted that the SCN is time-barred. Demand raised on sharing of international profits; incentives is not correct. On the behalf of Revenue, the findings of the impugned were supported and reliance was placed on the decisions of Charanjeet Singh Khanuja, C.M. Sapkal – 2016 (43) S.T.R. 106 (Tri. – Mumbai) and Krishan Murari Gupta – 2016 (44) S.T.R. 682 (Tri. – Del.) for the merits of the case.
The Hon'ble Bench after considering the submissions made, facts of the case and decisions referred by the Appellant, found that it has been contended by the Appellant that the show cause notice is non-specific and hence, not maintainable. The Hon'ble Bench taking note of one of the decisions relied upon by the Appellant in the matter of Kalpataru Power Transmission Ltd. – 2023 (69) GSTL 54 (Tri. - Ahmedabad), found that the impugned order cannot be sustained as there is no specific allegation in the show cause notice on the category of 'Business Auxiliary Service'. It was also held that the impugned order is not sustainable on limitation also, and if the demand is restricted to normal period, the total value of taxable services is within the small-scale exemption.
The Hon'ble Bench with the above observations and findings, set aside the impugned order and allowed the appeal.
Case details — Jagjeet Singh Parwana v. Commissioner of Central Excise and Service Tax, Chandigarh – II
Forum — CESTAT
Case No. — Final Order No. 60243/2023 dated 07.08.2023 in ST/59189
Represented by — CA Atul Kumar Gupta