2018 (5) TMI 315 - AT - Service Tax

Valuation - Sale of Pre-paid Vouchers/ Recharge Vouchers (RCVs) at discounted rates to the distributors - Section 67 of the Finance Act, 1994 - Held that - According to the amended provisions of Section 67, the value of any taxable service shall be the gross amount charged by the service provider for such service rendered by him - In instant case, the amount charged by the assessee (service-provider) is the amount received by them from dealers/distributors and nothing extra was charged by the appellants. Admittedly, Service tax was paid on this amount. It is true that the service rendered by the appellants by way of sale of pre-paid SIM cards was ultimately received by the subscribers. However, where the law prescribes the value of taxable service to be the gross amount charged by the service-provider, Service tax can be levied on that amount only. In the result, the assessee s appeal succeeds and the same is allowed. Appeal dismissed - decided against Revenue.

Issues involved:
Refund of service tax claimed due to excess payment on Pre-paid Mobile Service. Interpretation of Section 67 of the Finance Act, 1994 regarding the value of taxable service for service tax computation. Precedent value of tribunal orders and appeals admitted in higher courts.

Analysis:

Issue 1: Refund of service tax on Pre-paid Mobile Service
The case involved a dispute where the Respondent claimed a refund of service tax, contending that they had paid service tax in excess on Pre-paid Mobile Service due to the difference between the MRP and the discounted price at which they provided Recharge Vouchers (RCVs) to distributors. The vouchers were sold through intermediaries to retail customers. The adjudicating authority sanctioned the refunds, which was upheld by the Commissioner (Appeals), leading to an appeal by the Revenue.

Issue 2: Interpretation of Section 67 of the Finance Act, 1994
The main contention revolved around the interpretation of Section 67 of the Finance Act, 1994, which determines the value of taxable service for service tax computation. The Revenue argued that the value of service for tax computation should be based on the MRP paid by the subscriber, irrespective of any discounts provided to intermediaries. However, the Respondents argued that the value should be based on the amount received by them, as per the provisions of Section 67.

Detailed Analysis:
The Tribunal analyzed the provisions of Section 67 and noted that during the relevant period, service tax was payable on the gross amount charged by the service provider. The Tribunal highlighted that the value of taxable service was the gross amount charged by the service provider for the service rendered. The Tribunal referred to a previous case involving a similar issue and held that the amount received by the service provider from dealers/distributors constituted the value of taxable service for service tax purposes.

The Tribunal emphasized that the law prescribed the value of taxable service to be the gross amount charged by the service provider, and service tax could only be levied on that amount. Therefore, the appeal by the assessee was allowed, and they were held not liable to pay any differential service tax, resulting in the dismissal of the Revenue's appeal for imposing penalties.

Regarding the precedent value of tribunal orders and appeals admitted in higher courts, the Tribunal rejected the Revenue's argument that the correctness of the order was in jeopardy due to appeals admitted in higher courts. The Tribunal held that the doctrine of merger was not applicable in the present case, as it pertained to different proceedings before the High Court. The Tribunal cited relevant judgments to support its position and concluded that the Respondent was entitled to the refund, dismissing the appeals filed by the Revenue.

In conclusion, the Tribunal upheld the refund claim of the Respondent based on the interpretation of Section 67 of the Finance Act, 1994, and rejected the Revenue's arguments regarding the precedent value of tribunal orders and appeals admitted in higher courts. The decision provided clarity on the computation of service tax value and upheld the lower authorities' rulings in favor of the Respondent.

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