2021 (8) TMI 960 - AT - Service Tax

Levy of service tax - sharing of Revenue received by the appellant under joint venture agreement - demand where there is no joint venture agreement and the appellant were liable to pay service tax but the service tax was deducted - Business Auxiliary Service - difference between the telephone recharge amount paid by the customers and appellant remitted the amount to BSNL - HELD THAT - The difference amount between the sale of SIM card / recharge of SIM card and the amount remitted to the telephone company is nothing but only commission on which suffered service tax in the hands of principal. Entire matter needs reconsideration. Our views being prima-facie should not influence the findings to be given afresh by the Adjudicating Authority - Appeal allowed by way of remand.

Issues:
1. Demand of service tax under joint venture agreement for maintenance and repair services.
2. Service tax demand where no joint venture agreement existed.
3. Service tax demand on income from telephone recharge amount under Business Auxiliary Service.
4. Jurisdictional issue regarding service tax payment location.
5. Service tax on difference amount from telephone recharge - commission or not.

Analysis:
1. The first issue pertains to the demand of service tax under a joint venture agreement for maintenance and repair services. The Tribunal observed that the Adjudicating Authority had not considered the entire agreement comprehensively. The appellant argued that they were a partner in the joint venture and should not be liable for service tax. The Tribunal found that a proper legal analysis was lacking, and the matter required further examination.

2. The second issue involves a service tax demand where no joint venture agreement existed. The appellant contended that even though they were liable to pay service tax, the amount was deducted by the other party and deposited with the government. The Tribunal emphasized the need for verification to ascertain if the service tax had indeed been deposited, which would impact the appellant's liability.

3. The third issue concerns the demand of service tax on income derived from the difference between the telephone recharge amount received and the amount remitted to the telecom companies under Business Auxiliary Service. The Tribunal referenced various judgments to suggest that this difference amount might be considered as commission subject to service tax in the hands of the principal. The matter was deemed to require further examination by the Adjudicating Authority.

4. The fourth issue raised was the jurisdictional aspect of service tax payment location. The appellant argued that since services were provided in Rajasthan, the jurisdiction of that state should apply instead of Ahmedabad. The Tribunal noted that the relevant rules had not been fully considered by the Adjudicating Authority, necessitating a detailed examination of the jurisdictional issue.

5. The final issue revolved around determining whether the difference amount from telephone recharge constituted commission subject to service tax. Citing various judgments, the Tribunal opined that this amount might indeed be considered as commission. The Tribunal refrained from making a final determination and remanded the matter to the Adjudicating Authority for a fresh decision, keeping all issues open for further consideration.

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