2013 (6) TMI 317 - AT - Service Tax

Levy of ST on sale of SIM Cards of BSNL - extended period of limitation - 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 business auxiliary services and confirmation of demand on the distributors for the second time is not called for. - Demand set aside - Decided in favor of assessee.

Summary

Issues:
- Confirmation of Service Tax on sale of SIM cards by the respondents
- Interpretation of whether the activity amounts to providing business auxiliary services
- Consideration of earlier Tribunal decisions and certificates issued by BSNL regarding service tax payment

Analysis:
The judgment by the Appellate Tribunal CESTAT NEW DELHI, delivered by Ms. Archana Wadhwa, dealt with appeals filed by the Revenue regarding the confirmation of Service Tax on the sale of SIM cards by the respondents. The issue revolved around whether the sale of SIM cards of BSNL by the respondents constituted Business Auxiliary services. The respondents contended that they purchased the SIM cards from BSNL and were not reselling them on a commission basis. They argued that they became the owners of the goods upon purchase and that BSNL had already paid service tax on the SIM cards, thus leading to potential double taxation if the demand was confirmed.

The lower authorities had initially confirmed the demand and imposed penalties on the appellants. However, the Commissioner (Appeals) considered a previous Tribunal decision and certificates issued by BSNL confirming the payment of service tax on the full value of the SIM cards. Citing a recent decision in another case, the Tribunal held that the activity of purchasing and selling SIM cards, where service tax had been paid by BSNL, did not amount to providing business auxiliary services. Since the Revenue did not contest the certificates issued by BSNL, the Tribunal upheld the Commissioner (Appeals) order and rejected the appeals filed by the Revenue.

In conclusion, the judgment emphasized the importance of considering whether service tax had already been paid on the goods in question and how that impacted the classification of the activity as business auxiliary services. The decision highlighted the significance of supporting documentation, such as certificates from relevant authorities, in determining the tax liability in such cases.