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TMI Blog2015 (4) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... s auxiliary service'. It was adjudicated by the adjudicating authority vide order dated 12.3.2012, wherein the demand of service tax on the commission amounting to Rs. 6,15,005/- was confirmed and demanded interest under Section 75, penalties under Section 76, 77 and 78 were also imposed. The appellant filed appeal before the Commissioner (Appeals) who rejected the appeal of the appellant. Therefore, the appellant is before me. 3. Shri D.H. Nadkarni, learned counsel for the appellant, submits that the appellant has paid the service tax along with interest. Majority amount was paid prior to issuance of show cause notice and part amount was paid after the show cause notice and a small amount was paid after adjudication. He submits that the appellant is not contesting the demand of service tax which they have admittedly paid along with interest. He submits that before the Commissioner (Appeals) also they have not contested the demand but they prayed for waiver of the penalties in terms of Section 80 of the Finance Act, 1994. It is his submission that the very service of commission on sale of SIM cards of BSNL is not taxable as has been held in various judgments. He placed relianc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This issue can come up in two different types of transactions depending on the business model of the telecom operator. In some cases the distributor gets his consideration from customer at the time of sale of sim-cards through the margin in price. In some cases the distributor gets their consideration from the telecom operator by way of commission on the transaction normally called as sale. In the case before us the second type of situation exists. 14. The questions to be decided now is whether the demand of tax from the distributors is warranted in view of the fact that the tax on full value of service is being paid by BSNL keeping in view the decisions of the Tribunal given in the past in the matter. 15. The question as to what is the taxable value when a telecom operator sells sim-card of a specified MRP at a discounted price to distributors and the distributor sells the cards at MRP to customers was examined by the Tribunal in the case of BPL Mobile Cellular Limited v. CCE - 2007 (8) S.T.R. 546 (Tri. - Chennai). The Tribunal held that the discounted MRP price realised by BPL Mobile Cellular Ltd. from distributors will be the value of service to be taxed in the hands of BPL M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... providing service and not of sale of SIM-cards. In the case of SIM-cards there is at least some material involved. In the case of re-charge coupons there is no material involved and it is purely a case of marketing service. If distributors are buying SIM-cards from BSNL payment should be from distributor to BSNL. In the case before us tax is demanded on payments made from BSNL to distributor. In fact the source of information based on which demands are issued are Form 16A under Income Tax Act issued by BSNL to the distributors evidencing payment of commission to distributors. This is not a case where the distributors first paid for the value of the cards took possession and then sold the cards at a higher price. The argument that it is a case of buying and selling of cards appears to be raised only on the basis that there are MRPs for the cards and it is handed over to the customer against payment of such MRP. However the card by itself is of no use to the customer unless the service is activated by the Telecom Operator. So the cards have no value once it is dissociated from the service to be provided against payment made on MRP printed on the cards. So the transaction may have a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o service tax, this concept that a sub-contractor need not pay tax if the main service provider was paying tax on the value inclusive of the value of service provided by the sub-contractor was initially supported by C.B.E. & C in circulars like the following: (i) C.B.E. & C. Circular No. B-43/1/97-TRU, dated 6-6-1997 (ii) C.B.E. & C. Circular No. B-43/5/97-TRU, dated 2-7-1997 (iii) C.B.E. & C. Circular No. B-43/7/97-TRU, dated 11-7-1997 (iv) C.B.E. & C. Circular No. B-11/3/98-TRU, dated 7-10-1998 22. But this approach was changed with effect from 23-8-2007 when Circular No. 96/7/2007-S.T., dated 23-8-2007 was issued. The relevant Extracts from this circular reads as under:- Reference Code Issue Clarification (1) (2) (3) 999.03/23-8-2007 A taxable service provider out sources a part of the work by engaging another service provider, generally known as sub-contractor. Service tax is paid by the service provider for tine total work. In such cases, whether service tax is liable to be paid by the service provider known as sub-contractor who undertakes only part of the whole work. A sub-contractor is essentially a taxable service provider.' The fact that services provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charge of the service tax liability by the two parties is that the distributors raise bills for commissions that is due to them along with service tax and BSNL takes Cenvat credit of tax paid by distributors for discharging liability on the telecommunication service provided by BSNL, such procedure dos not result in extra realization of Revenue. Considering the special nature of the impugned activities and the fact that it can be easily verified that full taxable value of the service provided by BSNL to customers is subjected to tax, we are of the view that there is no case to undo decisions already taken by the Tribunal in this regard. A contrary approach will result in a difference in value that is taxed for mobile telecom service according to the decision of the Apex Court in the case of Commissioner v. BPL Mobile Cellular Ltd. - 2011 (24) S.T.R. J175 (S.C.). We also note that this issue has lost relevance for the future because of exemption under Notification 25/2012-ST-S. No. 29 for this type of service. 27. In view of analysis as above we set aside the impugned order and allow the appeals Daya Shankar Kailash Chand "3. We have seen the Supreme Court judgment in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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