2018 (2) TMI 576 - AT - Service Tax

Business Auxiliary Services - activities provided by the appellant for sale of SIM card and electronic rechargeable coupon to the customers - Held that - similar issue decided in the case of Chotey Lal Radhey Shyam Versus Commissioner of Central Excise And Service Tax, Lucknow 2015 (11) TMI 979 - CESTAT ALLAHABAD , where it was held that the appellant is only engaged in trading activity and does not render any taxable service in the category of business auxiliary service - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Taxability of activities related to sale of SIM cards and electronic rechargeable coupons under business auxiliary service for Service Tax.
2. Double taxation concern arising from payment of Service Tax by BSNL on SIM cards and recharge coupons.

Analysis:
Issue 1: The appeal challenged the categorization of activities related to the sale of SIM cards and electronic rechargeable coupons as taxable services under business auxiliary service for Service Tax. The appellant argued that since BSNL had already paid the Service Tax liability on the gross value of SIM cards and recharge coupons, imposing further tax on the appellant would result in double taxation. The appellant referenced several decisions by the Tribunal and High Court to support their stance, emphasizing that their role was that of a trader on a principal-to-principal basis, not an agent of BSNL promoting their business. The Tribunal concurred with the appellant's position, noting that demanding Service Tax from the appellant after BSNL had already paid would indeed constitute double taxation. The Tribunal held that the appellant's activities did not fall under the category of 'business auxiliary service,' as they were solely engaged in trading activities and did not provide any taxable services as per the relevant legal provisions. Consequently, the Tribunal found the impugned order to be inconsistent with the law and the precedents cited, ultimately ruling in favor of the appellant and setting aside the order.

Issue 2: The concern of double taxation arose from the fact that BSNL had already discharged the Service Tax liability on the SIM cards and recharge coupons sold to the franchisee. The Tribunal acknowledged this concern and emphasized that subjecting the appellant to further Service Tax in such a scenario would be impermissible under the law. By highlighting the appellant's role as a trader operating on a principal-to-principal basis and not as an agent of BSNL, the Tribunal reinforced that the appellant's activities did not warrant classification under 'business auxiliary service' for Service Tax purposes. This analysis underscored the legal principle that double taxation is not permissible and that the appellant's trading activities did not constitute taxable services, aligning with the decisions of the Tribunal and High Court cited during the proceedings.

In conclusion, the Tribunal's detailed analysis and interpretation of the legal provisions, supported by relevant precedents, led to the decision to allow the appeal in favor of the appellant, providing them with consequential relief. The judgment highlighted the importance of avoiding double taxation and correctly categorizing activities for Service Tax purposes, ultimately upholding the appellant's position in the dispute.