2008 (9) TMI 46 - AT - Service Tax

Appellant is a dealer who received SIM cards at 95 % of the taxable value from BSNL and sold it charging full value - sale of SIM cards for a consideration - the entire consideration charged from the customers is subjected to ST which is paid by the BSNL - therefore the finding that the appellant is promoting the business of sale or service of BSNL is misconceived - impugned order is therefore not consistent with law impugned activity cannot be treated as business Auxiliary Service

Summary

Issues:
Delay in filing appeal due to appellant's illness, Condonation of delay, Demand of service tax and penalty, Waiver of predeposit, Nature of appellant's business activity, Applicability of Business Auxiliary Service.

Delay in filing appeal due to appellant's illness:
The appellant filed an appeal with a delay of 72 days citing illness as the reason. The appellant submitted medical certificates proving his illness, including jaundice, typhoid, and brain surgery. The Judicial Member considered the submissions and medical evidence, concluding that the appellant had established sufficient cause for the delay. The delay was condoned, allowing the appeal to proceed.

Demand of service tax and penalty, Waiver of predeposit:
The impugned order demanded service tax and interest from the appellant for providing business auxiliary services without following statutory formalities. Penalties under various sections of the Finance Act were also imposed. The appellant applied for waiver of predeposit and stay of recovery of the dues. After hearing both parties, the appeal was taken up for disposal with their consent.

Nature of appellant's business activity - Applicability of Business Auxiliary Service:
The appellant was engaged in selling SIM cards received from a telecom company. The dispute arose regarding the service tax on the commission element included in the sale of SIM cards. The appellant argued that they were not promoting the telecom company's business but merely selling SIM cards at full value after paying the applicable tax. The appellant contended that their dealership did not fall under taxable services or Business Auxiliary Service. The appellant relied on tribunal decisions supporting their position.

Analysis and Decision:
The Judicial Member found that the appellant was only involved in the sale of SIM cards for a consideration, with the entire amount charged already subjected to service tax paid by the telecom company. Therefore, the finding that the appellant was promoting the telecom company's business was incorrect. Referring to previous tribunal decisions, the Judicial Member concluded that the appellant's activities did not constitute Business Auxiliary Service. The appeal was allowed based on the precedents cited, and the stay application was also disposed of accordingly.