2011 (8) TMI 254 - AT - Service Tax

Demand - Business auxiliary services - Purchasing and reselling of recharge coupons to M/s.BSNL - Assessee held that purchasing and reselling of coupons does not amount to providing of any service - Assessee clarified that the service tax stands confirmed by the lower authorities only on reselling of recharge coupons and not on other services provided by them - He further clarified that BSNL has already discharged service tax liability on the other activities undertaken by the appellant - Nowhere it has been shown as to whether the demand is only in respect of purchase and sale of recharge coupons or other activities of the appellants in providing services to BSNL are already included - The legal issue stands clarified by the judgments of the Tribunal but the facts are not clear - As such, set aside the impugned order and remand the matter to the original adjudicating authority for verification and clarification of facts and to decide the matter afresh

Summary

Issues:
Confirmation of service tax on purchasing and reselling recharge coupons to BSNL, applicability of service tax on business auxiliary services, penalty under various sections of the Finance Act, 1994.

Analysis:
The Appellate Tribunal, after hearing both sides, confirmed the service tax of Rs.1,60,616/- with interest against the applicants for providing business auxiliary services to BSNL from November 2004 to October 2005. A penalty of the same amount was imposed under section 76 of the Finance Act, 1994, along with penalties under sections 77 and 78 of the Act. The learned Counsel for the appellants argued that purchasing and reselling recharge coupons does not constitute a service, citing various Tribunal decisions supporting this stance.

On the contrary, the learned SDR contended that the appellants, as authorized franchisees of BSNL, provided telecom services such as cellular, basic phones, WLL connections, and customer care, justifying the confirmation of service tax. The appellants clarified that the service tax was confirmed only on the reselling of recharge coupons and not on other services provided to BSNL, as BSNL had already paid the service tax for those activities. However, the Tribunal noted that the facts were unclear in the impugned order, lacking clarity on whether the demand pertained solely to recharge coupons or included other services provided to BSNL.

The Tribunal, while acknowledging the legal clarity provided by previous judgments, decided to set aside the impugned order and remand the matter to the original adjudicating authority for verification and clarification of facts. The Tribunal instructed the authority to decide the issue afresh in line with the precedent decisions referenced.