2020 (3) TMI 83 - AT - Service Tax

Business Auxiliary Service - appellant have promoted the DTH Services of M/s. Sun Direct TV Pvt. Ltd., Chennai, for which they received recharge voucher cards from the principles at a discounted price and thereafter, sold the same at M.R.P. - demand alongwith interest and penalties - HELD THAT - The very issue has been dealt with by the co-ordinate Benches in M/s. Kumar s Electronics v. Commissioner of Central Excise, Madurai 2019 (6) TMI 852 - CESTAT CHENNAI where it was held that On the SIM cards, recharge coupons etc., where the service tax has been paid on the M.R.P by the main operator the commission agent / distributor need not pay service tax on the commission received by him because commission also forms part of the M.R.P. on which service tax has already been discharged. Demand not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Taxability of distributor's activity under 'Business Auxiliary Service' for promoting DTH services.
2. Applicability of service tax on commission received by distributor for selling recharge voucher cards.
3. Comparison of judgments in similar cases for determining tax liability.

Issue 1: Taxability of distributor's activity under 'Business Auxiliary Service' for promoting DTH services:
The appeal was filed against the Order-in-Appeal passed by the Commissioner of Central Excise, Coimbatore, holding the distributor's activity as taxable under 'Business Auxiliary Service.' The appellant received recharge voucher cards at a discounted price from the DTH operator and sold them at M.R.P. The Revenue issued a Show Cause Notice proposing tax, interest, and penalties. The Order-in-Original confirmed the demands. The appellant contended that similar issues were decided in favor of the distributor in previous cases.

Issue 2: Applicability of service tax on commission received by distributor for selling recharge voucher cards:
The appellant argued that service tax on commission should not be levied as it forms part of the M.R.P. on which tax has already been paid by the main operator. The Tribunal, citing previous decisions, agreed that the commission received by the distributor need not attract service tax if tax has been paid on the M.R.P. The rationale was to avoid double taxation and maintain revenue neutrality.

Issue 3: Comparison of judgments in similar cases for determining tax liability:
The Tribunal referred to decisions in cases involving telecom SIM cards and recharge coupons to establish that the commission received by the distributor need not be taxed separately if tax has been paid on the M.R.P. The judgments emphasized that the distributor's commission is part of the M.R.P. on which tax has already been discharged. The Tribunal held that the demand was not sustainable, setting aside the impugned order and allowing the appeal with consequential benefits.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the Order-in-Appeal and allowing the appeal based on the precedent set by previous decisions. The judgments highlighted the principle of avoiding double taxation on the commission received by the distributor, which is considered part of the M.R.P. on which tax has already been paid by the main operator.