2024 (5) TMI 524 - AT - Service Tax

Levy of service tax - Business Auxiliary Service - commission received from M/s Spice Telecommunications Ltd. - HELD THAT - The Commission received by the appellant are for sale of SIM Cards and other products of M/s Spice Communication Ltd. The service tax has already been paid by M/s Spice Communication Ltd. on the product sold by the appellant. This issue is no more rest integra and has been settled by the various decisions of the Tribunal - reliance placed in the case of COMMISSIONER OF CGST AND CENTRAL EXCISE VERSUS M/S RAMA SALES AND SERVICES 2018 (3) TMI 556 - ALLAHABAD HIGH COURT the Hon ble Allahabad High Court held that purchase and sale of SIM Cards by franshisee/distributors appointed by telecom companies not leviable to Service Tax under category of Business Auxiliary Service especially when such companies already discharged service tax on gross amount of Such SIM cards and charging any further service tax on same amount would lead to double taxation. Similarly, in the case of Dyal Medicos 2014 (11) TMI 1136 - CESTAT NEW DELHI it was held by the Tribunal that commission on SIM Cards of BSNL where service tax has already been discharged by BSNL on full value of SIM cards, separate commission is not payable. The impugned order is not sustainable in law and the same is set aside - Appeal allowed.

Summary

Issues involved: Determination of liability to pay service tax under the category of "Business Auxiliary Service" u/s 65(19) of Finance Act, 1994 on alleged commission received from M/s Spice Telecommunications Ltd.

Summary:

The appeal was filed against an order dismissing it for default u/s 35F of Central Excise Act, 1944, which was later waived during the pendency of the appeal. The main issue was whether the appellant was liable to pay service tax under the category of "Business Auxiliary Service" as per Section 65(19) of Finance Act, 1994, on the commission received from M/s Spice Telecommunications Ltd.

The appellant argued that the impugned order was not sustainable as they were engaged in the purchase and sale of products from M/s Spice Communications Ltd, who had already paid service tax on the products. They maintained their own sales network and staff, and the amount earned was from the sale and purchase of goods, not as commission.

The appellant further cited various decisions by the Tribunal and High Courts to support their case, emphasizing that the service tax had already been paid by M/s Spice Communications Ltd on the products sold by the appellant. The Department reiterated the findings of the impugned order.

After considering the submissions and perusing the material, the Tribunal found that the commission received by the appellant was for the sale of products of M/s Spice Communication Ltd, on which service tax had already been paid. Citing previous decisions, the Tribunal concluded that the impugned order was not sustainable in law, setting it aside and allowing the appeal with consequential relief, if any.

The Department's appeal against the decision was also dismissed by the Hon'ble Allahabad High Court, reinforcing the Tribunal's findings and decision.