2017 (11) TMI 1653 - AT - Service Tax

Business Auxiliary Service - consideration received/retained while selling ERC/SIM Cards of Reliance Telecommunication - Held that - When telecom operators discharged the service tax on the whole MRP value of ERCs/SIM Cards, there could be no further service tax liability on the persons, who are dealing/selling the said ERCs/SIM cards to the public - reliance placed in the case of Goyal Automobiles 2016 (2) TMI 725 - CESTAT NEW DELHI - appeal allowed - decided in favor of appellant.

Summary

Issues involved: Service tax liability on consideration received/retained while selling ERC/SIM Cards of Reliance Telecommunication under "Business Auxiliary Service."

Analysis:
The judgment by the Appellate Tribunal CESTAT DELHI dealt with the service tax liability of the appellant concerning the consideration received or retained while selling ERC/SIM Cards of Reliance Telecommunication. The appellant procured these cards from the telecommunication operator and sold them to consumers, receiving considerations in the form of retaining a portion of sale considerations or getting commissions on such activities. The Revenue contended that this consideration would attract service tax under "Business Auxiliary Service," leading to proceedings against the appellant resulting in the confirmation of service tax liability along with penalties.

Upon hearing both sides and examining the appeal records, the Tribunal noted that similar issues had been considered in previous appeals. It was established that if telecom operators had already paid service tax on the entire Maximum Retail Price (MRP) value of the ERCs/SIM Cards, there would be no additional service tax liability on those selling these cards to the public. The Tribunal referred to decisions in various cases such as Goyal Automobiles, Chotey Lal Radhey Shyam, and G.R. Movers to support this position.

Furthermore, the Tribunal highlighted that its approach had been upheld by the Honorable Supreme Court and the Honorable Madras High Court in separate cases. The Supreme Court's decision in 2015 and the Madras High Court's ruling in Bharti Televentures Ltd. affirmed the Tribunal's stance on the matter. Consequently, the Tribunal found the impugned order to be without merit and set it aside, ultimately allowing the appeal in favor of the appellant. The judgment was concluded with the order being dictated and pronounced in the open court.