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Chotey Lal Radhey Shyam Versus Commissioner of Central Excise And Service Tax, Lucknow

2015 (11) TMI 979 - CESTAT ALLAHABAD

Business Auxiliary service - profit margin earned by the appellant during the course of trading of sim cards and recharge coupon of Bharat Sanchar Nigam Ltd - Penalty u/s 77 & 78 - Held that:- In this case, BSNL had already paid service tax on the sim cards and recharge coupons sold to the franchisee and again demanding service tax from the franchisee would amount to double taxation which is not permissible in law. Secondly, we find that the appellant is only engaged in purchase and sale of sim .....

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he case of the appellant to the fact that the appellant is only engaged in trading activity and does not render any taxable service in the category of 'business auxiliary service'. - Decided in favour of assessee. - Appeal No. ST/1354/2010 - Final Order No. A/70012/2015 - Dated:- 16-9-2015 - P. S. Pruthi, Member (T) And S. S. Garg, Member (J) For the Petitioner : Shri Vineet Kumar Singh, Adv For the Respondent : Shri Govind K Dixit, Addl. Commissioner (AR) ORDER Per S. S. Garg The present appeal .....

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Aggrieved by the said order, the appellant is before us by way of present appeal. 2. Brief facts of the case are that M/s. Chotey Lal Radhey Shyam was appointed as a franchisee for Lucknow by BSNL for the sale of sim cards and recharge coupons of BSNL, who in turn, sells the same through network of retailers, which amounts to trading activity and the appellant has not provided any service to BSNL and the alleged agreement between him and the BSNL is on principal to principal basis. This relatio .....

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ng after-sale service, promoting BSNL brand, performing other promotional events, etc. Whereas, the appellant has produced on record the letter written by the Chief General Manager of BSNL to Commissioner of Central Excise and Service Tax, clarifying that the relationship between BSNL and its franchisee. Chief General Manager had also informed the Commissioner that BSNL does not pay any commission to its franchisee and only offer discount to their franchisee at the time of sale of recharge vouch .....

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l.) wherein the hon'ble Tribunal has held that service tax is not payable on the commission paid by BSNL out of the value of services for which BSNL has already paid service tax. The Tribunal in this case relied upon the following judgments: (i) Chetan Traders v. CCE 2008 (17) STT 318 (New Delhi-CESTAT) (ii) Hindustan Associated Traders v. CCE -[Final order Nos. 673 & 674 of 2007, dated: 7-6-2007] (iii) South East Corpn.v.CCE & ST 2009 (22) STT 446 (Bang.-CESTAT) (iv) Karakattu Commu .....

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rative portion, on reproduction, reads as: 'After hearing learned Counsel for the appellant, we are of the opinion that no substantial question arises in the instant appeal, in view of the decisions of the Apex Court in the case of Martend Food & Dehydrates Pvt. Ltd. vide Final order dated 6.11.2012, wherein it was held that activity of purchase and sale of SIM Card belonging to BSNL where BSNL has discharged the service tax on the full value of the SIM cards does not amount to providing .....

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rvice'. 5. The Learned A.R, for Revenue submits that activities of the appellants as seen from the contract clearly brings out that service in the nature of business auxiliary service is being rendered by appellants to BSNL. He draws attention to some clauses from the agreement showing General Obligations of the Franchisee and Responsibilities of the Franchisees and procedure for payment of commission/rewards/marketing expenses as given in the agreement are reproduced below:- "(a) The B .....

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Bank guarantee (as per annexure D of ₹ 5,00,000/-(Rupees Five lakh only) which shall be refundable for the due fulfilment of the said agreement." "1-6 Agent/Sales Executive/Sales force: In the interest of increasing the customer base, the Distributor can appoint retailer solely for the purpose of booking new prepaid cellular mobile connections" "1.9 Customer Counsellors; In the office a sale - person who receives walk-in-customers, understands their requirement, demonst .....

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stablish, 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 distribut .....

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r transfer or in anyway dispose of the merchandise except as provided in this Agreement (b) that the BSNL shall be liable to the quality and genuineness of the goods sold by the Distributor," "10.2 The BSNL may provide the marketing material to the Distributor. This may include but not limited to, information brochures, poster, inserts special giveaways, mailers (target-segment-specific) sales kits, folders, subscription forms, receipt books, stickers etc. 10.3 The BSNL will endeavour .....

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