2026-VIL-1476-CESTAT-KOL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Business Auxiliary Services - Commission Agent Services - Collective Investment Scheme - Appellants were commission agents for a company operating holiday options schemes with fixed tenure, engaged in promotion and marketing of holiday options and collection of advance payments. The Revenue sought to levy service tax on the commission received by the appellants as Business Auxiliary Services under Section 65(105)(zzb) read with Section 65(19) of the Finance Act, 1994, contending that the services provided by the appellants as commission agents in promotion and marketing of holiday options fell within the taxable category of BAS. The Appellate Authority confirmed the demand of service tax and imposed penalties for contravention of various statutory provisions including failure to register, failure to file returns, and suppression of facts with intent to evade service tax payment - Whether the appellants were liable to pay service tax on their commission receipts and whether the demand and penalties are sustainable in light of the finding by the Securities and Exchange Board of India (SEBI) that the scheme constituted a collective investment scheme - HELD - The scheme operated by the company was examined by SEBI which held that the scheme was a collective investment scheme in terms of Section 11AA (1) and (2) of SEBI Act and the company had not obtained registration under Section 12(B) of SEBI Collective Investment Scheme Regulation. Since the scheme is an investment scheme and not a taxable service scheme, the appellants are not liable to pay service tax on the services availed by them from the company. The classification of the commission agents' services under the Business Auxiliary Services category and the demand of service tax thereupon are not sustainable in light of the SEBI's determination that the underlying scheme was an investment scheme falling outside the scope of taxable services. The demand of service tax and the penalties imposed on the appellants are set aside in entirety. The appellants are entitled to refund of the amount already paid by them - The appeals are allowed with consequential relief as per law
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