2012 (10) TMI 137 - AT - Service Tax

Period of limitation - purchase and sale of SIM cards of Telecommunication company - Revenue imposed demand for the period January 2004 to March 2005 on ground of it being falling under head Business Auxillary Service - SCN dated 18.03.09 - Held that - It is found from Assistant Commissioner s letter dated 9.8.2005 that he arrived at a decision that such activity does not amount to service and the said decision was intimated the Revenue to the assessee under the said letter. Thereafter Revenue kept quiet for a period of four years and issued SCN on 18.3.2009. It is found that there was no change of circumstances and no new facts came on record. The appellant s activity remained the same even relevant period during the period under correspondence and subsequently also. As such it seems to be a case of change of opinion on the part of the Revenue. When the entire facts were put before the Revenue it cannot be said that the appellant had any mala fide on their part to suppress the activity undertaken by them. Further, during the relevant period, some of the decisions of the Tribunal were holding that such activity of purchase and sale of SIM cards would not amount to providing business auxiliary services. If that be so, no mala fide intention can be attributed to the appellant so as to attribute any suppression or misstatement to them with intent to evade payment of duty. Entire demand is barred by limitation - Decided in favor of assessee

Summary

Issues:
1. Whether the activity of purchasing and selling SIM cards amounts to business auxiliary service for service tax liability.
2. Whether the extended period of limitation is applicable due to alleged suppression of facts by the appellant.

Analysis:
1. The Appellate Tribunal considered whether the appellant's distribution of SIM cards constitutes a business auxiliary service for service tax liability. The Revenue initially raised a demand based on this premise, but the original adjudicating authority dismissed the Show Cause Notice, concluding that the activity was merely the sale and purchase of SIM cards without any service element. However, the Commissioner, in a subsequent review, reversed this decision, citing legal precedents such as the Supreme Court's ruling in Bharat Sanchar Nigam Ltd. v. Union of India. The Commissioner imposed service tax and penalties, relying on the interpretation that the activity fell under Business Auxiliary Service. The appellant contended that their arrangement with the SIM card provider was purely for sale and purchase, not for providing a service, as clarified in their correspondence with the Revenue.

2. The issue of the extended period of limitation arose due to the Revenue's contention that the appellant suppressed facts during the relevant period. The Revenue argued that despite the appellant's disclosure in 2005, the extended period was warranted based on alleged suppression. However, the Tribunal found that the appellant had transparently communicated the nature of their business activity to the Revenue in 2005, which was acknowledged by the Assistant Commissioner as not attracting service tax. The Tribunal noted that no new facts emerged, and the Revenue's subsequent reversal appeared to be a change of opinion. The Tribunal held that the appellant's actions did not demonstrate any mala fide intent to evade duty, especially considering the Tribunal's earlier decisions on similar cases. Consequently, the Tribunal concluded that the entire demand was time-barred by limitation, leading to the allowance of the appeal solely on this ground, without delving into the case's merits.