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2024 (5) TMI 376 - AT - Service TaxLevy of service tax - Business Auxiliary Services - appellant are purchasing SIM Cards/Recharge coupons from BSNL on full payment of the Purchase consideration and selling these SIM Cards/ Recharge coupons to its customers on a Principal to Principal basis on a profit Margin - HELD THAT - It is found that the commission received by the appellant are for sale of SIM Cards and other products of BSNL. It is also found that the service tax has already been paid by the BSNL on the products sold by the appellant. This issue is no more res integra and has been settled by the various decisions of the Tribunal as relied upon by the appellant in the case of COMMISSIONER OF CGST AND CENTRAL EXCISE VERSUS M/S RAMA SALES AND SERVICES 2018 (3) TMI 556 - ALLAHABAD HIGH COURT , the Hon ble Allahabad High Court held that purchase and sale of SIM Cards by franshisee/distributors appointed by telecom companies not leviable to Service Tax under category of Business Auxiliary Service especially when such companies already discharged service tax on gross amount of Such SIM cards and charging any further service tax on same amount would lead to double taxation. Revenue relied upon the decisions of the Hon ble Apex Court in the case of IDEA MOBILE COMMUNICATION LTD. VERSUS CCE. C., COCHIN 2011 (8) TMI 3 - SUPREME COURT . It is pertinent to mention that this judgment of the Hon ble Apex Court was considered by the Tribunal in the case of COMMISSIONER VERSUS DAYA SHANKAR KAILASH CHAND 2015 (8) TMI 1007 - ALLAHABAD HIGH COURT and it was observed by the Tribunal that the issue involved in the said case before the Supreme Court was different than the issue involved in the present case. The impugned order is not sustainable in law and the same is set aside - Appeal allowed.
Issues:
The issues involved in the judgment are the liability of the appellant to pay service tax under Business Auxiliary Services for promoting and marketing services offered by BSNL, demand for service tax, interest, and penalties, and the interpretation of agreements between the appellant and BSNL. Liability of Appellant for Service Tax: The appellant, an Authorized Distributor/Franchise of BSNL, was selling SIM Cards/Recharge coupons and the Revenue alleged liability to pay service tax under Business Auxiliary Services for promoting BSNL services. The show cause notice demanded service tax for a specific period along with interest and penalties. The Original Authority confirmed the demand, leading to the present appeal. Interpretation of Agreements with BSNL: The Ld. DR argued that the appellant operated as a franchise/agent of BSNL, receiving commissions for promoting BSNL services, not merely engaging in sale and purchase transactions. Citing a judgment, it was highlighted that the commission received by the appellant was for the sale of SIM Cards and other BSNL products, on which BSNL had already paid service tax. Legal Precedents and Tribunal Decisions: Various decisions cited by the appellant were considered, including the case of Commissioner of CGST Vs. Rama Sales and Service, where it was held that purchase and sale of SIM Cards by franchisees/distributors appointed by telecom companies are not leviable to service tax under Business Auxiliary Service. The Tribunal decisions emphasized that when service tax is already discharged by BSNL on the full value of SIM cards, no separate commission is payable. Judicial Review and Final Decision: The Tribunal analyzed the judgments cited by the Ld. DR and upheld the appellant's contentions based on legal precedents. By following the ratio of the decisions, the impugned order was deemed unsustainable in law and set aside, allowing the appeal of the appellant with consequential relief, if any, as per the law. This summary encapsulates the key issues, arguments, legal interpretations, and the final decision rendered by the Appellate Tribunal CESTAT CHANDIGARH in the cited judgment.
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