2016 (2) TMI 608 - AT - Service Tax

Demand of service tax on the value of SIM cards while rendering telecommunication services between September 2002 and March 2006 - Held that - SIM cards do not have a function other than as a service unextricably linked to the activation thereof which is itself acknowledged as a taxable service. - The appellant s contention in the grounds of appeal that discharge of VAT obligation to the state government will relieve them of tax liability under Finance Act, 1994 is, therefore, not tenable. Cenvat Credit - duty paying documents - address and name is different on the face of most of the Invoices - Held that - the onus vests on the claimant of credit to evidence the receipt of such services at such premises as are pertinent to the taxable services being rendered. Goods permit a certain ease of ascertainability by the tax officer; services are not easily amenable to such authentication and mere evidence of amalgamation of an entity with appellant will not suffice for the purpose of Rule 9(2) of CENVAT Credit Rules, 2004 without evincing place of receipt of input service as the place pertinent to supply of output service. The claim of the appellant fails rendering the order of the original authority unassailable on this count. Taxability of charges on roaming facility availed by customers of overseas service provider while in India - Held that - the tax was not being collected and paid into the Consolidated Fund of India since the introduction of the tax in 1994 and the Central Government has decided to regularize this industry practice prevailing for the period upto January 2007. The appellant being a licencee who has been conforming to the trade practice, is also a beneficiary of this magnanimity. Impugned order is not upheld on this count. Extended period of limitation is not invokable - Decided partly in favor of assessee.

Summary

Issues:
1. Tax liability on the value of SIM cards
2. Disallowance of CENVAT credit
3. Taxability of charges on roaming services

Analysis:

Issue 1: Tax liability on the value of SIM cards
The appellant contested the tax imposed on the value of SIM cards by referring to previous court decisions. The Hon'ble Supreme Court clarified that SIM cards are an integral part of the taxable service and not subject to VAT alone. The appellant's argument that discharging VAT obligations absolve them of tax liability under the Finance Act was deemed untenable. The Tribunal held that the tax on the sale value of SIM cards was justified, and the appellant's claim was dismissed.

Issue 2: Disallowance of CENVAT credit
The original authority disallowed CENVAT credit due to invoices not directly related to the appellant. The appellant argued that clerical errors in addresses were rectified and provided evidence of amalgamation with other entities. However, the Tribunal upheld the original authority's decision, emphasizing the importance of complying with CENVAT Credit Rules and the need to establish the receipt of services at relevant premises for claiming credit.

Issue 3: Taxability of charges on roaming services
The appellant sought exemption from tax on charges for roaming services based on a notification. However, the Tribunal clarified that the exemption applied to telegraph authorities, which the appellant was not classified as. The Tribunal upheld the tax liability on roaming charges, as per the impugned order.

In conclusion, the Tribunal ruled in favor of the tax liability on the sale of SIM cards and upheld the disallowance of CENVAT credit. The appellant's argument regarding the extended period for tax assessment was accepted, limiting the tax liability to a specific period. The interest and penalty were also restricted accordingly. The appeal was disposed of accordingly, with the judgment pronounced in court.