2023 (6) TMI 998 - AT - Service Tax

Levy of Service Tax - business auxiliary service - commission received by the appellant from their principal client M/s. BSNL in connection with sale and purchase of SIM card - HELD THAT - The commission received by the appellant since included in the gross sale price of SIM card sold to the customers and the total price of the SIM card suffered service tax no separate service tax can be demanded on the commission received by the appellant. This issue is no more res- integra as per the judgments delivered in the various cases cited by the appellant - reliance placed in the case of M/S. PATWARI ELECTRICALS VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS SERVICE TAX AURANGABAD 2016 (5) TMI 845 - CESTAT MUMBAI where it was held that the appellant is only engaged in purchase and sale of SIM cards and recharge coupons and his relation with BSNL is of principal to principal basis. The appellant cannot be termed as an agent of BSNL. The issue is no longer res- integra and stands settled in favour of the assessee - Appeal allowed.

Summary

Issues involved:
The issue involved in the present case is whether the commission received by the appellant from their principal client in connection with the sale and purchase of SIM cards is liable to service tax under the head of business auxiliary service.

Judgment Summary:

Issue 1: Liability of service tax on commission received

The appellant contended that since the commission received was included in the gross sale price of the SIM cards, on which service tax was already paid, no separate service tax could be demanded on the commission. The Tribunal found that the appellant's relation with the principal client was on a principal-to-principal basis, and the appellant was engaged in trading activity, not providing taxable services under "business auxiliary service." Citing various judgments, including Chotey Lala Radhey Shyam Vs. CCE & ST, Lucknow, the Tribunal set aside the impugned order and allowed the appeal with consequential relief.

Issue 2: Judicial precedents and findings

The Tribunal referred to previous decisions where similar controversies arose, such as the case of Daya Shankar Kailash Chand v. Commissioner of C. EX. & S. T., Lucknow, where the Tribunal held that the activity of purchase and sale of SIM cards, where service tax was already paid by the principal client, did not amount to providing business auxiliary services. The High Court upheld the Tribunal's decision, emphasizing that no substantial question arose in the appeal. The Tribunal, following these judgments, dismissed the appeal against the revenue, stating that the issue had already been settled in favor of the assessee.

Conclusion:

Based on the analysis of submissions and records, the Tribunal found that the issue was no longer res integra and was settled in favor of the assessee. Consequently, the impugned order was set aside, and the appeal was allowed.

(Pronounced in the open court on 21.06.2023)