2015 (10) TMI 576 - AT - Service Tax

Demand for Service Tax - Business Auxiliary Service (BAS) - purchase and sale of recharge coupons and Sim cards. - Held That - CESTAT order issued in respect of several appellants fully covers the issue in Respondent s favour - Judgement of CESTAT takes reference to the judgement of Supreme Court in the case of Idea Mobile Communications Ltd - Found no merit in Revenue s appeal Decision made in the case of Idea Mobile Communications Ltd Vs. CCE, Cochin 2011 (8) TMI 3 - SUPREME COURT OF INDIA followed - Decided in favour of the Respondent.

Summary

Issues:
1. Interpretation of Business Auxiliary Service (BAS) under Section 65(19) of the Finance Act, 1994.
2. Applicability of service tax on commission received for sale of recharge coupons and Sim cards.
3. Comparison with relevant legal precedents and judgments.
4. Consideration of the CESTAT order dated 29.01.2014 in a similar case.
5. Analysis of the Supreme Court judgment in Idea Mobile Communications Ltd Vs. CCE, Cochin [2011 (23) STR 433 (SC)].

Issue 1: Interpretation of Business Auxiliary Service (BAS) under Section 65(19) of the Finance Act, 1994
The primary adjudicating authority confirmed a service tax demand on the appellant for not paying service tax under BAS on the commission received from BSNL for sale of recharge coupons and Sim cards. The appellant was held to have received the commission for marketing and distribution of BSNL telecom service in addition to product sales. However, the Commissioner (Appeals) set aside this order, stating that Sim cards/recharge coupons sales were not covered under BAS.

Issue 2: Applicability of service tax on commission received for sale of recharge coupons and Sim cards
The Revenue contended that the appellant's activities fell under the definition of BAS as per Section 65(19) of the Finance Act, 1994. The appellant was appointed by BSNL for marketing and distribution of telecom services, including maintaining an organization for marketing, conducting surveys, selling products, answering queries, and promoting services. The service rendered by the appellant to BSNL was argued to be covered under business auxiliary service.

Issue 3: Comparison with relevant legal precedents and judgments
The Revenue cited the judgment of the Supreme Court in Idea Mobile Communications Ltd Vs. CCE, Cochin [2011 (23) STR 433 (SC)] and the CESTAT Delhi judgment in CCE, Meerut Vs. Moradabad Gas Service 2013 (31) STR (Tri.-Del.), which relied on the Supreme Court's decision. The appellant referred to a CESTAT order dated 29.01.2014 in its own case, wherein the issue was decided in favor of the appellant, citing the judgment of the Supreme Court in Idea Mobile Communications Ltd.

Issue 4: Consideration of the CESTAT order dated 29.01.2014 in a similar case
The Tribunal considered the CESTAT order dated 29.01.2014, which covered the issue in favor of the appellant. The order referred to the judgment of the Supreme Court in Idea Mobile Communications Ltd and concluded that the service rendered by the appellant to BSNL was not covered under business auxiliary service.

Issue 5: Analysis of the Supreme Court judgment in Idea Mobile Communications Ltd Vs. CCE, Cochin [2011 (23) STR 433 (SC)]
The Tribunal analyzed the Supreme Court judgment in Idea Mobile Communications Ltd, which was cited by both parties. The judgment clarified the distinction between taxable service under the Finance Act and sale of goods under the Sales Tax Act, providing insights into the taxation of SIM cards and related services. The Tribunal found no merit in the Revenue's appeal based on the legal precedents and dismissed the appeal.

Overall, the Tribunal upheld the Commissioner (Appeals) decision, ruling in favor of the appellant and dismissing the Revenue's appeal against the service tax demand on commission received for the sale of recharge coupons and Sim cards.