TMI Blog2013 (6) TMI 339X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the Tribunal in this regard This issue has lost relevance for the future because of exemption under Notification 25/2012-ST-S. No. 29 for this type of service. - Demand set aside - Decided in favor of assessee. - Appeal Nos. ST/ 7, 198 & 1200 of 2011 & 540 of 2012 - FINAL ORDER Nos.ST/A/684-687/2012-CUS - Dated:- 6-11-2012 - Ms. Archana Wadhwa, Member (J) and Shri Mathew John, Member (T) Shri Vineet Kumar Singh, C.A., for the Appellant. Shri Govind Dixit, DR, for the Respondent. ORDER Mathew John; In this proceeding four appeals are being decided together because all these appeals involve the same issue. 2. The appellants are distributors of sim cards needed to enable telecommunication service provided by BSNL through mobile telephone. They also market recharge coupons which enables additional duration of time for which such service is allowed to the customers of BSNL. BSNL supplies these cards with fixed Maximum Retail Price (MRP) to the appellants. They collect the value of the cards and remit the value to BSNL. BSNL pays service tax on the full value of the cards. For doing these services BSNL pays commission to the appellants. The service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Counsellors; In the office a saleperson who receives walk-in-customers, understands their requirement, demonstrates the service and tries to close the order, have been appointed by the Noticee. Also he attends to telephonic enquiries and pursue the same, 1-10 Customer Care Executives: These are trained persons who guide/solve the problems of the subscribers regarding the usage of the service/handset and interact with the customer care centre for complaint handling. 5. Scope of Marketing Distribution: The distributor shall provide cellular mobile services to walk-in customers. It shall also establish, through its sales force, direct contract with prospective customers and register as many new cellphone customers as possible subject to a minimum number fixed by BSNL Distributors shall also distribute prepaid products and services to its retailers. 8.1 The BSNL will grant to the Distributor right for the marketing and distribution of products and services in the territory as described in Annexure- F from the Dealer outlet(s) for which the BSNL will compensate the distributor as described, 9. General Obligation of the Distributor: 9.1 The Distributor shall mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued Circular No. 1001/26/2002/Taxation/BSNL/568 dated 25.5.07 wherein directions have been given to their field formations to issue directions to ail franchisees/agents for taking service tax registration and discharging their service tax liability. The extracts from the said letter as appearing in para 1.7 of the impugned order relating to GR Movers as under: 3. Hence in this connection, it is directed to issue the necessary instructions to all agents/distributor of BSNL entitled for commission to take necessary action as follows immediately. (i) Get registration from the service tax department if applicable, (ii) Raise bills/challans on BSNL for commission as prescribed in Rule 4A (1) of the Service Tax Rules, 1994. If bills raised are not as per the said rule, service tax amount charged in those bills will not be paid by BSNL, (iii) For the agents/distributors coming under the threshold limit and opting to avail the exemption, the present practice of commission payable may continue. (iv) For compliance of the service tax provisions/rules agents/distributor shall be solely responsible, 9. In view of the above position the ld. A. R. for Revenue submits t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lular Ltd. from distributors will be the value of service to be taxed in the hands of BPL Mobile Cellular Ltd. This decision is affirmed by the Apex Court as reported at Commissioner v. BPL Mobile Cellular Ltd. - 2011 (24) STR 175 (SC). Obviously in that case service tax got restricted to the tax on discounted price at which the mobile operator was selling the card. In the present case of BSNL, tax on the full value of the card is paid undisputedly. 16. The facts of this case are being illustrated by considering sale of sim-cards for activation of mobile service with assumed value of ₹ 500/-. BSNL issues sim-cards costing ₹ 500/- plus service tax of ₹ 50/- to the distributor as per terms of an agreement against appropriate security. Distributor sells the card to the customer, collects ₹ 550 from customer by cheque in the name of BSNL and deposits it with BSNL. BSNL pays service tax of ₹ 50 to Govt. Out of the remaining Rs, 500 constituting the value of service rendered by BSNL, Rs, 15 is paid to the distributor. Revenue is asking service tax on this ₹ 15 from the distributor considering it as consideration for business auxiliary service ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... once it is dissociated from the service to be provided against payment made on MRP printed on the cards. So the transaction may have a colour of sale and may be referred to as sale by the parties to the transaction but this is essentially not a sale but a charge for service to be provided in future. Tax is demanded on services for which payments were made by BSNL to distributor, (ii) BSNL is paying service tax for value of telecommunication service being provided by them to the customer. Revenue is demanding tax on the service provided by distributor to BSNL which is in the nature of marketing of the services of BSNL to its customers and tax is demanded under the head of Business Auxiliary Service . Under the scheme of levy and collection of service tax there is a liability on the distributors to pay service tax to the exchequer on the service rendered by them to BSNL. 20. In the past the Tribunal has dropped such demand both for the reason that it is a case of purchase and sale of cards and for the reason that the total value of service including the value of service rendered by distributor is subjected to tax in the hands of BSNL. The first argument may not be a good arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he total work. In such cases, whether service tax is liable to be paid by the service provider known as sub-contractor who undertakes only part of the whole work. A sub-contractor is essentially a taxable service provider. The fact that services provided by such sub-contractors are used by the main service provider for completion of his work does not in any way alter the fact of provision of taxable service by the sub-contractor. Services provided by sub-contractors are in the nature of input services. Service tax is, therefore, leviable on any ;taxable services provided, whether or not the services are provided by a person in his capacity as a sub-contractor and whether or not such services are used as input services. The fact that a given taxable service is intended for use as an input service by another service provider does not alter the taxability of the service provided. 23. The argument of the distributors in the present case is not as unreasonable as illustrated in the example discussed above. The following aspects need to be noted in this regard. This is not a case where the distributor is doing a service, billing for it, collecting th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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