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2023 (10) TMI 812 - AT - Service TaxLiability of service tax - commission received against the sale of SIM card on MRP - in such MRP the commission is already included and on that MRP the principal i.e. the mobile company has discharged the service tax - whether the appellant being a commission agent is liable to pay service tax on the commission received by them from the mobile Company in the present case, M/s. Vodafone Essar Gujarat Limited.? HELD THAT - Since the mobile companies admittedly paid the the service tax on gross MRP out of that only commission is paid, demand on service tax is double demand on the same amount. This issue has been considered in various judgments - reliance can be placed in COMMISSIONER OF CENTRAL EXCISE, MEERUT VERSUS MORADABAD GAS SERVICE 2014 (1) TMI 199 - CESTAT NEW DELHI where it was held that Inasmuch as there is no dispute about the fact of payment of entire service tax by BSNL on the full value of SIM cards/recharge coupons, we are of the view that Commissioner (Appeals) has rightly set aside the confirmation of demand. The demand on commission for sale of SIM cards is not sustainable, hence the impugned order is set-aside - appeal allowed.
Issues Involved:
1. Whether the commission received against the sale of SIM cards on MRP, where the commission is already included and the mobile company has discharged the service tax on the MRP, makes the appellant liable to pay service tax on the commission received from the mobile company. Summary: Issue 1: Liability of Commission Agent to Pay Service Tax The core issue in this case is whether the appellant, acting as a commission agent, is liable to pay service tax on the commission received from the mobile company, M/s. Vodafone Essar Gujarat Limited, when the service tax has already been discharged by the mobile company on the gross MRP. The appellant's counsel argued that this issue is no longer res-integra, citing various judgments where it was held that no separate demand can be made since the mobile company itself discharged the service tax on the MRP, which includes the commission. Precedents and Judgments:The Tribunal referred to several judgments to support the appellant's case: - Moradabad Gas Service (2013): The Tribunal held that demanding service tax on the commission paid to distributors, when the mobile company has already paid service tax on the gross MRP, would result in double taxation.- Goyal Automobiles (2016): The Tribunal noted that the commission paid to appellants is included in the value on which tax has been collected from the customer, thus setting aside the impugned orders and allowing the appeals. - Dyal Medicos (2017): The Tribunal concluded that the activity of purchase and sale of SIM cards, where the mobile company has discharged the service tax on the full value, does not amount to providing business auxiliary services, thereby setting aside the demand for service tax on the distributors. Tribunal's Findings: Upon careful consideration, the Tribunal found that since the mobile companies have paid the service tax on the gross MRP, demanding service tax again on the commission paid to the dealers would constitute double taxation. The Tribunal emphasized that the special nature of the impugned activities and the fact that the full taxable value of the service provided by the mobile company to customers is subjected to tax, supports the view that there is no case for a separate demand on the commission received by the dealers. Conclusion:Considering the above decisions and the special nature of the transactions, the Tribunal concluded that the demand on commission for the sale of SIM cards is not sustainable. Therefore, the impugned order was set aside, and the appeal was allowed. Pronouncement:The judgment was pronounced in the open court on 05.10.2023.
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