2009 (7) TMI 802 - AT - Service Tax

Waiver of pre deposit Business Auxiliary Services - sale of SIM cards on commission - issue is now covered by the decision of this Bench in the case of Vallamattam Communications v. CCE - prima facie case for waiver of the condition of the pre-deposit - waiver of the pre-deposit of the amount is allowed

Summary

Issues involved:
1. Service tax liability under 'Business Auxiliary Services' for selling SIM cards.
2. Validity of the demand of service tax liability and penalties imposed.
3. Prima facie case for waiver of pre-deposit of the confirmed amount.

Issue 1: Service tax liability under 'Business Auxiliary Services' for selling SIM cards:
The case involved a dispute regarding the service tax liability of the applicant for selling SIM cards of BSNL and receiving a commission/discount. The Revenue contended that the applicant was providing services under 'Business Auxiliary Services' based on which a show cause notice was issued. The adjudicating authority initially dropped the proceedings, but the Commissioner, as a revisionary authority, issued a show cause notice and confirmed the demand of service tax liability along with penalties.

Analysis: The Tribunal examined the nature of the applicant's activities in selling SIM cards and considered the arguments presented by the Chartered Accountant. The Tribunal referred to previous decisions by the Bench and a Coordinate Bench to assess the applicability of the case law to the current situation. Ultimately, the Tribunal acknowledged that the applicant's purchase of SIM cards from BSNL for resale constituted a trading activity, supporting the contention that the service tax liability was not applicable under 'Business Auxiliary Services.'

Issue 2: Validity of the demand of service tax liability and penalties imposed:
The Tribunal reviewed the records and observed that the core issue was the sale of SIM cards by the applicant, emphasizing the source of the SIM cards from BSNL. The Chartered Accountant argued that previous decisions by the Bench and a Coordinate Bench were relevant to the case. The Tribunal considered the prima facie case presented by the applicant for waiver of the pre-deposit amount confirmed by the Commissioner. Consequently, the Tribunal allowed the application for waiver and stayed the recovery of the amount until the appeal's disposal.

Analysis: The Tribunal carefully analyzed the arguments and evidence presented by both parties regarding the demand of service tax liability and the penalties imposed. By recognizing the trading nature of the applicant's activities and the relevance of previous decisions, the Tribunal determined that a prima facie case existed for the waiver of the pre-deposit amount. This decision highlights the importance of considering the specific circumstances of the case and relevant legal precedents in determining the validity of tax liabilities and penalties.

In conclusion, the judgment by the Appellate Tribunal CESTAT, Bangalore addressed the issues related to service tax liability under 'Business Auxiliary Services' for selling SIM cards, the validity of the demand for service tax liability and penalties, and the prima facie case for waiver of the pre-deposit amount. The Tribunal's detailed analysis of the facts, legal arguments, and precedents led to the decision to allow the waiver application and stay the recovery of the confirmed amount pending the appeal's disposal.