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2014 (6) TMI 590 - AT - Service TaxWaiver of pre-deposit - Valuation - inclusion of discount offered to dealers as part of consideration - sale of Recharge Voucher (RCVs) - RCVs are sold at MRP - Penalty u/s 78 - from April, 2008 to March, 2009 - telecommunication service - Held that:- period involved in this case is from April, 2008 to March, 2009 and Section 67 was amended w.e.f. 18/4/2006 and simultaneously service tax (Determination of Value) Rules, 2006.So far as the reliance placed by the applicant on the case laws cited by the applicant is concerned they relate to period prior to the amendment of the provisions of law. Admittedly, the explanation was added to Rule 5 (1) of Service Tax Rule vide which it was clarified that service specified in sub-section (zzzx) of clause 65 of section 105 of the Finance Act, 1994, the value of the taxable service shall be the gross amount paid by the person to whom telecom service is provided by the telegraphic authority" which goes to show that the intention of Registration has always been to levy the tax on the value received from the person to whom the telecom service is provided by the telecom authority. In this case the service is provided to the consumer and not to the distributor. Hon'ble High Court of Kerala in the case of Vodafone Essar Cellular Limited [2010 (8) TMI 691 - KERALA HIGH COURT] has held that "So much so, there is no sale of any goods involved as claimed by the assessee and the entire charges collected by the assessee at the time of delivery of Sim Cards or Recharge coupons is only for rendering services to ultimate subscribers and the distributor is only the middleman arranging customers or subscribers for the assessee." Once it is established that the charges collected from the customer in lieu of the RCVs is a service charge, not a sell, it is automatically established that the amount deducted by the dealer is nothing but commission which should be included to the taxable income of the noticee". The above case relates to applicability of certain income tax provisions but the decisions support the Department's case. Prime facie case is against the assessee - directed to make pre-deposit of 25% of duty involved - stay granted partly.
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