2018 (12) TMI 439 - AT - Service Tax

Nature of transaction - Sale or service - sale of post paid SIM - registration of post paid SIM - sale of Anant plan (Life time prepaid SIM) - Levy of service tax - time limitation - Held that - The issue is squarely covered by Hon ble Apex Court judgment in the case of M/s. Idea Mobile Communication Ltd. vs Union of India 2011 (8) TMI 3 - SUPREME COURT OF INDIA , where it was held that The position in law is therefore clear that the amount received by the cellular telephone company from its subscribers towards SIM Card will form part of the taxable value for levy of service tax, for the SIM Cards are never sold as goods independent from services provided - Demand of service tax upheld. Time Limitation - Held that - The appellant have not put forward any evidence to show that the fact of sale of SIM card etc. and its value not being included in the taxable value, was in the knowledge of the department - Since the appellant have been working under self-assessment mechanism and if they are having any doubt in their mind, they should have sought clarification from the department regarding the includibility of the sale value of SIM and other plans in the taxable value for levy of Service Tax. However, they have failed to do that - plea that the demand is hit by period of limitation is not acceptable. Appeal dismissed - decided against appellant.

Summary

Issues:
Confirmation of demand against the appellant on the value received for various services including sale of SIM cards and plans, applicability of Service Tax on the value received, contention regarding sales tax already paid, limitation on the demand period.

Analysis:
The appeal involved the confirmation of a demand of &8377; 4,88,898 against the appellant for the value received on account of services like sale of postpaid SIM cards, registration of SIM cards, and sale of specific plans. The lower adjudicating authority and the Commissioner (Appeals) had held these amounts includable in the taxable value for Service Tax. The appellant argued that the amounts received were for the sale of SIM cards and plans, on which sales tax had already been paid, thus not taxable under the Service Tax Act.

The Tribunal found the issue to be covered by a Supreme Court judgment in the case of M/s. Idea Mobile Communication Ltd. vs Union of India. The judgment emphasized that the value of SIM cards forms part of the activation charges, as they are integral to providing mobile services and not sold as independent goods. The Tribunal noted that the appellant had not substantiated their claim that the amounts paid by customers were refunded or adjusted towards Service Tax and service charges. The difference between the Service Tax actually paid and payable remained equal to the demanded amount, supporting the confirmation of the Service Tax.

Regarding the issue of limitation, the appellant failed to provide evidence that the department was aware of the non-inclusion of SIM card sale value in the taxable amount. The Tribunal held that the appellant, working under self-assessment, should have sought clarification if in doubt. As they did not, the plea of limitation on the demand period was rejected. Upholding the Order-in-Appeal based on the Supreme Court's judgment, the Tribunal rejected the appeal, affirming the confirmation of the Service Tax demand.

In conclusion, the Tribunal upheld the Order-in-Appeal, rejecting the appellant's arguments on the taxable value of services provided and the limitation on the demand period. The decision was based on legal precedents and the appellant's failure to substantiate their claims or seek clarification from the tax authorities.