2026-VIL-735-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Chargeability of service tax on commission received from multi-level marketing company - The appellants were associates of a multi-level marketing company and received commission, royalty, bonus etc. for sponsoring associates to join the company and increase sales of the company's products - Whether the commission, royalty, bonus etc. received by the appellants from the multi-level marketing company is liable to service tax – HELD - The Tribunal in its earlier decisions in Surendra Singh Rathore, Charanjeet Singh Khanuja and others, held that the activity of a distributor in a multi-level marketing company of identifying and sponsoring other persons to join the company as distributors and thereby increasing the sales of the company's products constitutes "Business Auxiliary Service" as defined under Section 65(105)(zzb) of the Finance Act, 1994. The present case involves the post-negative era where any activity carried out by a person for another for consideration, including a declared service, is covered under the definition of 'service' in terms of Section 65B(44) of the Act. It is an admitted position that the appellants were to bring more and more associates/distributors so that the business of the company could be expanded, and the company in turn was making the requisite consideration to the appellants in the form of commission, royalty, bonus etc. Therefore, the appellants were rendering services to the company for consideration and were liable to discharge service tax – The matter is remanded to the Adjudicating Authority for re-calculation of the service tax liability. However, the extended period of limitation cannot be invoked as there was a bona fide belief in the mind of the assessee regarding the taxability of the commission, royalty, bonus etc. received from the multi-level marketing company, and the duty liability shall be restricted to the normal period – The appeal is partly allowed
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