2008 (1) TMI 331 - AT - Service Tax

Penalty - levy of tax on the buying & selling of recharge coupons of mobile phones assessee made delay in payment of tax & interest because of dispute whether tax was leviable on above activities under head business auxiliary service - levy of tax is still in dispute as revealed from the various decisions of the Tribunal since appellants have already deposited the tax, adjudicating authority has rightly imposed minimum penalty of Rs. 100 each u/s 76 and 77 by exercising his power u/s 80

Summary

Issues:
Appeal against revised order enhancing penalties under sections 76 and 78 of the Finance Act, 1994 for delay in tax payment on sale of recharge coupons of mobile phones.

Analysis:
The appellants, engaged in selling recharge coupons, were penalized under sections 76 and 78 of the Finance Act, 1994 by the Commissioner of Central Excise. The appellant argued that the delay in tax payment was due to a dispute regarding the tax levy on their activities, citing precedents like Steel India, Sunitha Shetty, Renee Telepoint, and South East Corpn. The Departmental Representative supported the Commissioner's decision, referencing Bharat Sanchar Nigam Ltd v. Union of India. The Tribunal noted conflicting decisions on the taxability of SIM card transactions and the penalty imposition, as seen in the cases of South East Corpn., Renee Telepoint, and Steel India.

The Tribunal observed that the tax levy on SIM card transactions was contentious, as evidenced by previous decisions. It referenced the Karnataka High Court's ruling in Sunitha Shetty, emphasizing the discretion under section 80 of the Act. Despite the Department's reliance on BSNL Ltd., which pertained to sales tax on telephone services, the Tribunal found the appellant did not contest the tax liability. The key issue was the imposition of penalties in a disputed tax scenario. Since the tax liability remained in dispute based on Tribunal decisions, and the appellants had already paid the tax, the Tribunal concluded that the Commissioner's revision of penalties was unwarranted. Consequently, the Commissioner's order was set aside, and the Assistant Commissioner's decision was reinstated, allowing the appeal with consequential relief.