2007 (11) TMI 272 - AT - Service Tax

Appellants purchased BSNL post-paid/pre-paid Cellular SIM Cards and sold the same in the market. They have only received certain amount of profit - they have only done the activity of purchase and sale which comes within the purview of sale of goods and only sales tax is attracted - Commissioner (Appeals) s finding that the appellant is doing the activity of marketing and distribution of products and it comes within the ambit of Business Auxiliary Service is not correct

Summary

Issues:
Levy of Service tax on the purchase and sale of SIM cards under 'Business Auxiliary Services'.

Analysis:
The appeal arose from an Order-in-Appeal confirming Service tax and penalty under Section 78 of the Finance Act, 1994 on the appellants acting as dealers of a telecom company. The appellants contended that they were only involved in the sale of SIM cards and not providing any services, as the telecom company had already paid Sales tax on the cards. They argued that being dealers selling goods, Service tax was not applicable. The Tribunal noted that in similar cases, it was held that the purchase and sale of SIM cards did not fall under the purview of Service Tax. The Tribunal emphasized that the appellants were engaged in the sale of goods, not in providing services, as clarified by the telecom company's payment of Service tax on the cards. The Tribunal set aside the Order-in-Appeal, following the precedent set in previous judgments.

The learned Counsel for the appellants cited previous cases where the Tribunal had allowed appeals in similar matters, emphasizing that the issue was covered in their favor. The Tribunal considered the arguments and findings of the authorities, reiterating the position taken by both sides. Upon careful consideration, the Tribunal referenced specific cases where it was held that the activity of purchasing and selling SIM cards did not constitute Business Auxiliary Services subject to Service tax. The Tribunal highlighted that the appellants were simply involved in the sale of goods, not in rendering services, as evidenced by the telecom company's payment of Service tax on the cards. The Tribunal concluded that the impugned order was set aside, and the appeal was allowed based on the established legal precedent.

In a detailed analysis of the case, the Tribunal examined the nature of the appellants' business activities, emphasizing that they were engaged in the purchase and sale of SIM cards, which fell under the category of 'sale of goods' attracting Sales tax, not Service tax. The Tribunal referenced correspondence with the telecom company, which clarified the payment of Service tax on the cards sold to the appellants, further supporting the conclusion that no double taxation should occur. The Tribunal found no merit in the Order-in-Appeal and set it aside, allowing the appeal with consequential relief, if any. The decision was based on the established legal principles and interpretations of the relevant tax laws, ensuring consistency with previous judgments and maintaining clarity on the applicability of Service tax in similar cases.