2024 (5) TMI 129 - AT - Service Tax

Levy of Service tax - commission accounted by the appellant in their books account - amount collected for installation and activation of TV connection is inclusive of service tax or not - HELD THAT - The appellant provides installation and activation of Sun DTH TV connection. The activation charges collected from customer by M/s. Sun DTH TV is inclusive of service tax. The appellant does not collect any further amount from customer. The commission for providing the service to the customer thereafter is paid to the appellant by M/s. Sun Direct TV. It is clear that the amount collected from the customer includes the service tax as well as the commission charges paid to the appellant. The very same issue was considered by the Tribunal in the case of M/S. KUMAR S ELECTRONICS VERSUS COMMISSIONER OF CENTRAL EXCISE 2019 (6) TMI 852 - CESTAT CHENNAI where it was held that ' It is true that the appellant is providing services to the DTH operators and is getting commission for such services. If the appellant had paid service tax on such commission, the main DTH operator could have availed Cenvat credit of the same thereby proportionately reducing the amount paid in cash by the DTH operator. Therefore the entire exercise is also revenue-neutral.' The facts in the case are identical to the facts in the case of Kumar s Electronics - The facts being identical, the decision squarely applies. The impugned order is set aside. The appeal is allowed.

Summary

Issues:
The issues involved in this case are:
1. Whether the demand of service tax on the commission accounted by the appellant in their books account is legal and proper.

Summary:

Issue 1:
The appellant, engaged in providing Dish Antenna connection, received commission from M/s. Sun Direct TV Private Limited without discharging service tax. The department issued a show cause notice for non-payment of service tax under 'Business Auxiliary Service' for the period 2007-2008 to 2010-2011. The original authority and the Commissioner (Appeals) confirmed the service tax, interest, and penalties. The appellant appealed to the Tribunal challenging the order.

The appellant argued that the commission received was inclusive of service tax as M/s. Sun Direct TV had already paid service tax on the amounts received from customers. The appellant did not receive any additional amount from customers for installation and activation of TV connections. The department contended that the appellant did not provide evidence to show that the commission received was subject to service tax.

The Tribunal considered the appellant's activity of providing installation and activation of TV connections, where the charges collected from customers by M/s. Sun Direct TV included service tax. The commission paid to the appellant was part of the amount collected from customers, which already included service tax. The Tribunal referred to a similar case of Kumar's Electronics where it was held that no service tax needs to be paid on the commission received by the distributor if service tax has been paid on the maximum retail price (M.R.P.). The Tribunal set aside the impugned orders and allowed the appeal, stating that the demand for service tax cannot be sustained.

Therefore, the Tribunal ruled in favor of the appellant, setting aside the demand for service tax on the commission accounted by them, as it was already included in the amount paid by customers to M/s. Sun Direct TV.