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2018 (5) TMI 410 - AT - Service TaxNature of activity - sale or service? - business of purchase/ sale of Sim Cards to various distributors across the country under an agreement with such persons - Appellant were called upon to pay service tax alongwith interest and penalty on the ground that the sale of Sim cards is taxable communication services provided to the customer as said service has been provided on behalf of M/s RCOM. Held that: - the Appellant are engaged in the activity of providing Business Support Service to M/s RCOM under which it is providing billing and collection services to RCOM under an agreement. In addition to same they are also engaged in separate activity of selling of SIM cards and other hardware to the distributors who are selling it onwards to customers - the Appellant is not providing any telecommunication service to any person or subscribers. Hence in such case there is no principal service or dominant service to which the sale of sim card can be related. In the present case the Appellant has separately sold the Sim cards to the distributors and therefore cannot be considered as rendering of services to subscribers of RCOM. Further such transactions having been accepted to be liable for VAT cannot be subjected to service tax under the category of “Telecommunication Services”. The adjudicating authority has not given any findings as to how the sale of sim cards by the Appellant is part of the telecommunication services of RCOM when the sale of sim cards is a separate transaction. In such case we find that in absence of any cogent reasons the demands is not sustainable. Time limitation - penalty - Held that: - there is no deliberate attempt on the part of Appellant to evade payment of tax - extended period of limitation and penalty cannot be invoked. Appeal allowed - decided in favor of appellant.
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