9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (1) TMI 734 - AT - Service TaxLevy of service tax - Business Auxiliary Services - activity of distributing and selling SIM Cards and Air Time Scratch Cards by the appellant - HELD THAT - The issue is no more res integra and has been decided in favour of the assessees in a number of judgments. This Bench in the case of Jalandhar Sales vs. Commissioner of CE ST, Ludhiana 2024 (5) TMI 561 - CESTAT CHANDIGARH has held that ' the tribunal has held that the activity of purchase and sale of SIM card belonging to BSNL where BSNL 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 distributor for the second time is not called as per Section 65(19) and 65(105) (zzb) of Finance Act, 1994.' Conclusion - Appellant are not liable for service tax for the sale of SIM cards. Appeal allowed. 1. ISSUES PRESENTED and CONSIDERED The core legal question in this judgment is whether the activity of distributing and selling SIM Cards and Air Time Scratch Cards by the appellant constitutes the provision of 'Business Auxiliary Services' under the Finance Act, 1994, thereby making it liable for service tax. 2. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents The primary legal framework revolves around the Finance Act, 1994, specifically the provisions concerning 'Business Auxiliary Services' under Section 65(19) and the applicability of service tax under Section 73(1). The precedents cited include various judgments where similar issues were adjudicated, such as the cases of Commissioner of CGST Vs. Rama Sales, Dyal Medicos, and Daya Shankar Kailash Chand. Court's Interpretation and Reasoning The court interpreted the activity of the appellant as not constituting 'Business Auxiliary Services' because the telecom companies, such as BSNL, had already discharged the service tax liability on the full value of the SIM cards. The court reasoned that imposing service tax again on the appellant would result in double taxation, which is not permissible. Key Evidence and Findings The court relied on the factual matrix that the telecom companies had already paid the service tax on the gross amount of the SIM cards. This was a crucial piece of evidence that supported the appellant's claim that their activity was merely a sale transaction and not a service provision. Application of Law to Facts Applying the law to the facts, the court concluded that the appellant's activities did not fall under the definition of 'Business Auxiliary Services' as defined in the Finance Act, 1994. The court applied the principle that when the primary service provider (telecom companies) has discharged the service tax, the intermediary (appellant) should not be taxed again for the same transaction. Treatment of Competing Arguments The court considered the arguments from both sides. The appellant argued that their activity was a sale and not a service, supported by various precedents. The Revenue, on the other hand, maintained that the appellant provided auxiliary services. The court found the appellant's argument more persuasive, given the existing legal precedents and the principle against double taxation. Conclusions The court concluded that the appellant was not liable to pay service tax under the category of 'Business Auxiliary Services' for the sale of SIM cards, as the tax liability had already been discharged by the telecom companies. 3. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning "...purchase and sale of SIM Cards by franchisee/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." Core Principles Established The judgment establishes that double taxation is not permissible, and when a primary service provider has discharged the service tax liability on a transaction, intermediaries involved in the sale of such goods are not liable to pay service tax again under 'Business Auxiliary Services.' Final Determinations on Each Issue The final determination was that the appellant's appeal was allowed, and they were not liable for service tax for the sale of SIM cards. The court granted consequential relief as per law, effectively overturning the previous orders that had imposed tax liability on the appellant.
|
