2015 (5) TMI 65 - AT - Service Tax

Valuation - sale of Recharge Vouchers and SIM Cards - whether the respondent is required to discharge the service tax liability on the amount which they have received from the distributors and dealers or on the MRP on which the subscribers purchases Recharge Vouchers and SIM Cards from the distributors or dealers. - Held that - Respondents have discharged the service tax liability on the basis of MRP to the ultimate subscribers after the Recharge Vouchers and SIM Cards as and when sold directly to the subscribers; the respondent also discharged the service tax liability on the actual amount received by them from the distributors and dealers for the sale of Recharge Vouchers and SIM Cards from such distributors and dealers. - Following decision of BPL Mobile Cellular Ltd. 2007 (6) TMI 107 - CESTAT, CHENNAI - Decided against Revenue.

Summary

Issues:
1. Disputed service tax liability on prepaid services provided by the respondent.
2. Determination of taxable value for service tax calculation on Recharge Vouchers and SIM cards.
3. Interpretation of Section 67 of the law regarding taxable service value.

Issue 1: Disputed service tax liability on prepaid services provided by the respondent.

The appeal involved the Revenue challenging an order that dropped demands raised on the respondent regarding alleged short payment of service tax on prepaid services provided. The respondent, engaged in providing telephone services, had discharged service tax liabilities but was accused of under-valuing the tax amount. The department claimed the respondent should consider the entire amount as MRP for tax calculation, while the respondent argued for considering the amount received from distributors and dealers. The Tribunal analyzed previous judgments and the law to resolve this issue.

Issue 2: Determination of taxable value for service tax calculation on Recharge Vouchers and SIM cards.

The core issue was whether the respondent should discharge service tax liability based on the MRP or the amount received from distributors and dealers for Recharge Vouchers and SIM cards. The respondent had paid tax based on MRP for direct sales to subscribers and the actual amount received from distributors and dealers. The Tribunal examined the law, precedents, and submissions from both sides to make a decision.

Issue 3: Interpretation of Section 67 of the law regarding taxable service value.

The Tribunal referred to Section 67 of the law to determine the taxable value of services rendered. It noted that the law required the gross amount charged by the service provider to be considered for tax calculation. Relying on precedents and the Explanation to Section 67, the Tribunal concluded that the service tax should be levied on the amount received by the respondent from dealers and distributors. The Tribunal cited relevant case law and dismissed the Revenue's appeal based on authoritative judicial pronouncements.

Overall, the Tribunal upheld the impugned orders, stating they were legally sound and devoid of merit. The decision was based on a thorough analysis of the law, precedents, and submissions from both parties.