2016 (12) TMI 1275 - AT - Service Tax

Business auxiliary services - amount of commission/discount received from BSNL Telecom - franchise agreement - respondent is selling the BSNL services to BSNL customers and receiving certain commissions or discounts on the sale of services. On the amount received by the respondent, BSNL has already discharged service tax - whether respondent liable to pay service ttax under BAS? - Held that - the issue is no more res integra, similar issue decided in the case of M/s. Daya Shankar Kailash Chand Versus CCE& ST, Lucknow 2013 (6) TMI 340 - CESTAT NEW DELHI , where it was held that activity of purchase and sale of SIM card belonging to BSNL where BSNL has discharged the service tax on the full value of the SIM cards, does not amount to providing business auxiliary services and confirmation of demand on the distributors for the second time is not called for - respondent is not liable to pay service tax under the category of BAS - appeal dismissed - decided against Revenue-appellant.

Summary

Issues:
Interpretation of Business Auxiliary Service (BAS) in relation to the sale of BSNL services and products, liability of the respondent to pay service tax on commission received from BSNL, applicability of judicial pronouncements in determining tax liability.

Analysis:
The case involved a dispute regarding the liability of the respondent, a franchise of BSNL, to pay service tax under the category of Business Auxiliary Service (BAS) on the commission received from the sale of BSNL services and products. The Revenue contended that as the respondent was providing BAS to BSNL, they were liable to pay service tax. However, the learned Commissioner (Appeals) ruled in favor of the respondent, citing various judicial pronouncements that the respondent was not liable to pay service tax on the commission received from BSNL Telecom. The Revenue challenged this decision before the Appellate Tribunal.

The Tribunal considered the facts of the case where the respondent was selling BSNL services to customers and receiving commissions or discounts. It referred to the decision in the case of Daya Shankar Kailash Chand vs. CCE & ST, Lucknow, where it was held that the sale and purchase of SIM cards belonging to BSNL, where BSNL had discharged the service tax on the full value of the SIM cards, did not amount to providing Business Auxiliary Services. The Tribunal also mentioned the decision of the High Court of Allahabad, which dismissed an appeal related to the same issue, emphasizing that the sale and purchase of SIM cards were excluded from Business Auxiliary Service.

Based on the above decisions, the Tribunal concluded that the issue was settled law and held that the respondent was not liable to pay service tax under the category of BAS. Therefore, the impugned order of the learned Commissioner (Appeals) was upheld, and the appeal filed by the Revenue was dismissed. The Tribunal found no infirmity in the decision and pronounced the order accordingly.

In summary, the judgment clarified the interpretation of Business Auxiliary Service in the context of the sale of BSNL services and products, determining the liability of the respondent to pay service tax on the commission received from BSNL. The Tribunal relied on previous judicial pronouncements to establish that the sale and purchase of SIM cards, where BSNL had already paid service tax, did not fall under the purview of Business Auxiliary Service, thereby absolving the respondent from the tax liability.