Neeta P Desai Versus Commissioner of CGST & Central Excise Mumbai West
Service Tax
2018 (5) TMI 1060 – CESTAT MUMBAI – TMI
CESTAT MUMBAI – AT
Dated:- 20-3-2018
APPEAL NO: ST/87919, 87922, 87938 & 87941/2017 – A/86100-86103/2018
Service Tax
Shri M V Ravindran, Member (Judicial)
Shri D.P. Bhave, Advocate for appellant
Shri V R. Reddy, Assistant Commissioner (AR) for respondent
All these appeals are directed against Order-in-Appeal No: IM/CGST A-III/MUM/14-17/17-18 dated 11/09/2017 passed by the Commissioner of Central Tax (Appeals – III), Mumbai.
Heard both the sides and perused the records.
2. The issue that falls for consideration in all these appeals is whether the activity of the appellant which is in the form of, business auxiliary service', as claimed by Revenue, in the multilevel marketing is taxable or otherwise. It is undisputed that appellant is one of the distributor in the multilevel marketing of products of Forever Living Products (India) Pvt
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ods from Amway at the Distributors h Acquisition Price (DAP)) and sell the same in retail at price not exceeding MRP fixed by the Amway. This activity of the Distributors, in our view, cannot be treated as promotion. marketing or sale of the goods produced or provided by or belonging to the client (Amway), as the sale of the goods purchased by the Distributors from Amway is not the sale of the goods belonging to their client – Amway. Once the Amway products have been purchased by a Distributor from Amway, those products cease to belong to Amway, but belong to the Distributor and sale of these goods by the Distributor would not constitute service to Amway. For the same reason, any incentive or commission received by a Distributor from Amway for buying certain quantum of goods from Amway during a month cannot be treated as the consideration received for promotion or marketing or sale of the goods produced by or provided by or belonging to the client, more so, as this commission is not li
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sideration 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 commissioner earned by a Distributor from Amway based on his own volume of purchase from Amway and the commission earned by him 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. For quantifying the Service tax demand on the commission received from Amway on the volume of purchase made by the distributors sponsored /enrolled by a particular distributor i.e. the Distributor's sales group, these matters would have to be remanded to the Original Adjudicating Authority.”
which needs to be conside
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