Commission Income from Business Auxiliary Services Liable to Service Tax, Not Covered under Negative List: CESTAT [Read Order]
The Bench clarified that commission received for rendering Business Auxiliary Services is taxable and does not fall within the Negative List under Section 66D. Since the appellant was registered under BAS and had received commission income, the service tax liability was clearly attracted.
Business - Auxiliary - service - taxscan
Business - Auxiliary - service - taxscan
The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), Principal Bench, New Delhi upheld the levy of service tax on commission income earned under Business Auxiliary Services (BAS). The Tribunal ruled that such services do not fall under the Negative List specified in Section 66D of the Finance Act, 1994, and therefore attract service tax liability.
The appellant, Anil Gaur, a commission agent, had received ₹17.53 lakh as commission during the period April 2016 to June 2017 for rendering Business Auxiliary Services. The department found that these services were neither exempted under the Negative List nor covered by Notification No. 25/2012-ST (Mega Exemption).
Since no service tax was paid on the commission income, a show-cause notice dated 7 October 2021 was issued proposing recovery of ₹2,77,952, along with interest and penalties.
The adjudicating authority confirmed the demand through an Order-in-Original dated 21 April 2022, which was later upheld by the Commissioner (Appeals), Jodhpur, on 14 July 2023. Aggrieved, the appellant filed an appeal before the Tribunal.
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The appellant contended that the show-cause notice was barred by limitation, arguing that delays in replying to departmental correspondence were unintentional and that the omission was not a case of willful suppression.
It was further argued that as a small proprietor, he lacked expertise in tax compliance and had already settled earlier disputes under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, showing his bona fide intent.
The Department, however, submitted that the appellant had deliberately failed to file ST-3 returns and had concealed taxable income despite repeated reminders. It was argued that the conduct showed a clear intent to evade service tax, justifying the invocation of the extended limitation period under the proviso to Section 73(1) of the Finance Act, 1994.
After examining the record, Dr. Rachna Gupta (Judicial Member) held that the appellant had been previously issued a similar show-cause notice for 2011-2016, which he settled under the Sabka Vishwas scheme.
Despite this, he again failed to pay service tax or file returns for the subsequent period (April 2016-June 2017). This pattern of non-compliance, coupled with delayed replies and non-filing of returns, was considered willful suppression of facts with intent to evade tax.
On merits, the Bench clarified that commission received for rendering Business Auxiliary Services is taxable and does not fall within the Negative List under Section 66D. Since the appellant was registered under BAS and had received commission income, the service tax liability was clearly attracted.
Accordingly, the Tribunal upheld the confirmation of service tax demand, interest, and penalties, dismissing the appeal.
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