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2016 (2) TMI 725 - CESTAT NEW DELHI

2016 (2) TMI 725 - CESTAT NEW DELHI - 2016 (43) S.T.R. 268 (Tri. - Del.) - Demand of service tax on commission received for sale of SIM cards and top-up cards - t the impugned order has built its foundation on the assumption that appellants render “business auxiliary service” in relation to SIM cards and hence liable to tax on the commission earned by them. At the same time, the impugned order has considered the commission received as discount on sale of recharge and “top-up” coupons as not liab .....

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r than M/s Bharat Sanchar Nigam Ltd; thus, it is no different from the other two products. - As commission system and sale methodology in relation to SIM cards is the same as the other two products, we, for the reason elaborated supra, set aside the impugned orders and allow both the appeals with consequential relief. - Decided in favor of assessee. - Appeal No: ST/59396 & 59770/2013 & Application No: ST/Stay-60030 & 60490/2013 - Final Order No: 53947-53948/2015 - Dated:- 27-10-2015 - MR. JU .....

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llants are franchisee distributors of products of M/s Bharat Sanchar Nigam Ltd in which capacity they have entered into agreements with the principals for sale of SIM cards, recharge coupons and top-up coupons relating to mobile telephony. SIM cards sold to first-time customers require activation after the payments have been deposited with M/s Bharat Sanchar Nigam Ltd all of which are handled through the franchisee distributor. The other two products are sold to existing customers and do not inv .....

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,785.01 on services related to SIM cards and ₹ 3,17,819 in relation to the other products. In addition, the appellants were held liable to interest and penalties under section 77 and 78 of Finance Act, 1994. In the impugned order, Commissioner (Appeals) has confirmed the findings of the lower authorities in relation to tax on commission earned on SIM cards while dropping the demands relating to the recharge coupons and top-up cards. 4. In the grounds of appeal it is contended that the tax .....

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gh the compensation scheme and the activities of the franchisees are alike in the marketing/sale of the three products with distinction between them being attributable to customer categorization, the impugned order has dichotomized them differently in terms of taxable service for the SIM cards and in terms of products for the other two and thus contrived to take the former into the tax net. 6. We note that the impugned order has built its foundation on the assumption that appellants render busin .....

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er of Central Excise, Lucknow [2013 (30) STR 634 (Tri.-Del.)] and Daya Shankar Kailash Chand vs. Commissioner of Central Excise & Service Tax, Lucknow [2013 (30) STR 428 (Tri.Del.)]. The Hon ble High Court of Allahabad has upheld these two decisions. 7. We find that this contrived distinction attempted in the impugned order by the first appellate authority does not conform to logic or to any commercial distinction. On the contrary, the three decisions cited above are clear in laying down the .....

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