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TMI Blog2015 (6) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... ndicated on the SIM Cards. Appellant does not give any commission on the RSP/MRP mentioned on the SIM Cards, instead provides prepaid recharge vouchers, free of charge to the dealers as commission for the sale effected by them. The amount collected by selling these vouchers is fully retained by the dealers as commission and no amount is paid to appellant; it is the case of the Revenue that the service tax needs to be paid on such recharge vouchers distributed free by the appellant which also includes an element of service tax which has not been deposited in the Government treasury. After investigation and recording of the statements show-cause notice dated 01.09.2008 was issued to the appellant demanding differential service tax, interest thereof and penalties were proposed on amount of recharge vouchers distributed free by them during the period 01.04.2003 to 30.09.2006. Appellant contested the show-cause notice before the adjudicating authority mainly on the ground that the provisions of Section 67 of the Finance Act, 1994, during the relevant period indicates the service tax liability to be discharged on the amount charged for the services rendered. Adjudicating authority did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x liability to be discharged on gross amount received for the services rendered. 3.3 He would also rely upon the decision of this Tribunal in the case of Tata Tele Services Ltd. -Appeal No.ST/79, 179/10-Mum for the same proposition. 4. Learned D.R. on the other hand, would draw our attention to the findings recorded by the adjudicating authority. 4.1 It is his submission that the appellant herein has distributed recharge vouchers free to the dealers in lieu of commission payable. He would submit that the services provided by the appellant are to the subscriber. He would submit that the subscriber who had purchased this recharge voucher from the dealer would be paying the entire amount to the dealer. He would also emphasise that the amount paid by the ultimate subscriber/customer is inclusive of the service tax payable on such recharge voucher; which would amount that the dealers have recorded the service tax liability from the subscriber. 4.2 He would submit that since the service tax liability has been borne by the individuals, the appellant herein being a service provider should have discharged the service tax liability. He would emphasise that the impugned order be upheld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove reproduced provision that the value of any taxable service shall be gross amount charged by the service provider for such services rendered by him. In the case in hand, during the relevant period, the appellant herein being service provider has discharged the service tax liability on the prepaid SIM Cards sold by them to the distributors/dealers. The sale of such prepaid SIM Cards on the MRP value is undisputed and discharge of service tax liability for services rendered on such sale is also accepted by revenue. It is to be noted that the recharge voucher are distributed free of cost, appellant has not received any amount towards the recharge voucher, though the distributors/dealers have sold the recharge vouchers. In our view distribution of recharge voucher fee of cost to the distributors/dealers would in a way amount to giving commission to the dealer for the transactions of sale of prepaid SIM Cards for the appellant. It can also be noticed that during the relevant period the Explanation as per the Section 67 of Finance Act, 1994 (herein above reproduced) also do not indicate inclusion in that gross value of any cost towards free distribution made by the service provider. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Rule 5 were further explained by an Explanation in respect of telecommunication services which reads as under:- "Explanation.- For the removal of doubts, it is hereby clarified that for the value of telecommunication service shall be gross amount paid by the person to whom telecommunication service is actually provided". (Emphasis ours) It can be seen from the above, the said explanation is now from 01.03.2011 states categorically that the gross amount paid by the person to whom telecommunication service is actually provided is the amount on which tax liability is to be discharged which would mean that prior to 01.03.2011, the amount received by telecommunication provider from the dealer is the amount received for the services provided by the service provider. 6.6 We also find the learned Counsel is correct to bring to our notice that the CBEC was of the same opinion as can be seen from para 5 of the Circular No. 62/11/2003-ST dated 21.8.2003. We reproduce the same:- "Service rendered free of charge: 5.1 In the context of certain services, a doubt has been raised as to whether service tax will be payable if the service is provided free of charge. 5.2 As per charging sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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