2016 (9) TMI 488 - AT - Service Tax

Demand alongwith interest and penalty - Business Auxiliary Service - commission received on purchase and sale of SIM Cards of BSNL - Held that - the issue has been dealt by this Tribunal and the same has been affirmed by the Hon ble Allahabad High Court in the case of Daya Shankar Kailash Chand 2015 (8) TMI 1007 - ALLAHABAD HIGH COURT . Therefore, in the light of the above decision, as the appellant is also engaged in the activity of sale and purchase of the SIM Cards of BSNL and on these SIM Cards of BSNL deposit service tax, therefore, we hold that the appellant is not liable to pay service tax under the category of Business Auxiliary Services on the commission received by them on sale and purchase of SIM Cards. - Decided in favour of appellant with consequential relief

Summary

Issues:
- Whether the commission received by the appellant for sale of SIM Cards is chargeable to service tax under "Business Auxiliary Service"?
- Whether the demand, interest, and penalties imposed on the appellant are justified?
- Whether the appellant is liable to pay service tax under the category of Business Auxiliary Services for the sale and purchase of SIM Cards of BSNL?

Analysis:
1. The appellants were involved in the purchase and sale of SIM Cards of BSNL. The revenue claimed that the commission received by the appellant on these sales is subject to service tax under the category of "Business Auxiliary Service." Consequently, proceedings were initiated against the appellants, resulting in the confirmation of demand, interest, and penalties.

2. The Tribunal considered the issue in light of previous judgments, including the decision of the Hon'ble Supreme Court in the case of Idea Mobile Communication Ltd. The Tribunal noted that the issue before the Supreme Court was different from the one at hand. Referring to various case laws, including a detailed order by the Tribunal in a similar matter, it was concluded that the activity of sale and purchase of SIM Cards belonging to BSNL, where BSNL had already paid service tax on the full value of the SIM Cards, does not constitute providing business auxiliary services. Therefore, the demand on the distributors for the second time was deemed unnecessary, and the impugned order was set aside, allowing the appeal with consequential relief to the appellants.

3. The Tribunal further clarified that since the appellant was engaged in the sale and purchase of SIM Cards of BSNL, and service tax was already deposited on these SIM Cards by BSNL, the appellant was not liable to pay service tax under the category of Business Auxiliary Services for the commission received on these transactions. Consequently, the impugned orders were set aside, and the appeals were allowed with consequential relief.

In conclusion, the judgment by the Appellate Tribunal CESTAT CHANDIGARH ruled in favor of the appellant, holding that the commission received for the sale and purchase of SIM Cards of BSNL was not subject to service tax under Business Auxiliary Services due to BSNL already discharging the service tax liability on the full value of the SIM Cards. The decision was based on a detailed analysis of relevant case laws and previous judgments, ultimately providing relief to the appellants.