TMI Blog2018 (5) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - ST/89908/2014 - A/86019/2018 - Dated:- 13-4-2018 - Shri Ramesh Nair, Member (Judicial) And Shri Raju, Member (Technical) Shri Gopal Mundra, C.A. for Appellant Shri Roopam Kapoor, Commr. (A.R) for respondent Per: Ramesh Nair This appeal is directed against Order-in-Original No. 58/STII/RS/2014 dated 19.08.2014 passed by the Commissioner of Service Tax, Mumbai - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings was given by the adjudicating authority on this point. He draws our attention to the clauses of agreement between the Appellant and M/s RCOM which are as under: [ ] Business means the marketing of RCOM service s or various tariff plans related to the telecommunication services offered by RCOM, including Fixed Wireless Terminals/ Fixed Wireless Phones etc. and any other services offered by RCOM from time to time; [ ] While marketing the services, RCIL shall be free to bundle the tariff plans of RCOM with other products or services as it deem fit and offer composite schemes to the customer; [ ] RCIL shall raise bills on behalf of RCOM and send the same to the subscriber either electronically or printed bills through courier or through means as agreed to between the parties. RCIL, may raise consolidated statement of charges to the subscribers including amounts due, if any, to RCIL; [ ] RCIL shall also undertake the responsibility of collecting on behalf of RCOM from the subscribers; [ ] RCOM shall bear all expenses in respect of marketing, billing and collection services [ ] (emphasis supplied) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts are entirely different. The issue involved was whether the value of sim cards sold by M/s Idea was to be included in the value of telecommunication services provided by them or whether the said activity of sale of sim cards liable to sales tax/ VAT whereas in the present case they are not providing any telecommunication service and hence the facts are entirely different. He submits that the Dominant Nature Test is inapplicable to the present case as the independent sale of SIM card to the Distributors and provision of marketing and distribution services to M/s RCOM. That the adjudicating authority has wrongly held that SIM cards need to be activated for providing telecommunication service and therefore forms part of the Telecommunication service provided by RCOM and cannot be sold as goods. The SIM card is not integral part of Telecommunication service but is part of telecommunication network. The network consists of various elements of goods which are owned by the subscriber as well as telecom operator. Till the time of activation of telecommunication services, all the element remain in network building stage and the actual provision of telecommunication service commences on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be considered as goods and thus liable for Service tax. He supports the findings of the impugned order. 6. On careful consideration of the submissions made by both the sides and perusal of records. We made by both the sides. On going have carefully considered the submissions through the entire facts of the case we find 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. We find that 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. No evidence is on record which can show that the sale of sim card is related to telecommunication services of RCOM. The sale of sim card is an independent activity without any relation to any other service hence the same cannot be made liable to service tax. The consideration received from sale of Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... telecom services. 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 . 7. The adjudicating authority has relied upon the judgment of Hon ble Apex Court in case of M/s Idea Communications supra. However we find that the facts are quiet different. In M/s Idea Communication case the said assessee were providing telecommunication services to its subscribers and was charging service tax on activation charges and in order to provide such service they also sold sim cards and discharged sales tax on such activity. The issue involved was whether the value of Sim cards sold by M/s Idea were to be included in the value of telecommunication services provided by them for the purpose of payment of service tax or it was liable for VAT/ Sales Tax. The Sales Tax authorities themselves conceded the position before the High Court that no assessment of sales tax would be made on sale value of SIM card supplied by the said concer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the cellular telephone company from its subscribers towards SIM Card will form part of the taxable value for levy of service tax, for the SIM Cards are never sold as goods independent from services provided. They are considered part and parcel of the services provided and the dominant position of the transaction is to provide services and not to sell the material i.e. SIM Cards which on its own but without the service would hardly have any value at all. Thus, it is established from the records and facts of this case that the value of SIM cards forms part of the activation charges as no activation is possible without a valid functioning of SIM card and the value of the taxable service is calculated on the gross total amount received by the operator from the subscribers. The Sales Tax authority understood the aforesaid position that no element of sale is involved in the present transaction. It was under the above facts that M/s Idea was themselves the telecom service provider who issued sim cards to their customer that the sim cards were made liable to service tax being part of telecommunication services. In the present case as per the facts narrated above the Appellant themse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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