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TMI Blog2018 (7) TMI 1291X X X X Extracts X X X X X X X X Extracts X X X X ..... ct from April 2007 to March 2012. 2. The factual matrix relevant for the purpose of the impugned adjudication is that the Appellant is mentioned to be a telecommunication service provider who is paying due Service Tax on the services as provided by him. It is his case that the Appellant sells SIM Cards to the distributers who further sell it to the subscribers. In certain cases, he gives SIM Cards free of cost to the distributors without any consideration. In the former case, the Appellant is discharging the Service Tax liability. However, in the later case, since there is no consideration received, the Appellant is not paying any Service Tax. However, a Show Cause Notice dated 19.10.2012 was issued to the Appellant alleging it to have not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnai) and Vodafone Essar vs. Commissioner, 2015-TIOL-1173-CESTAT-MUM, which was upheld by Hon'ble Supreme Court vide Citation No. 2011 (24) STR J 175 (SC). It is impressed upon that the period post March 2011, i.e., after the inclusion of explanation to Rule 5, the Appellant has made good the short payment of Service Tax even qua the free SIM Cards given to the distributors. This is an admitted fact as apparent from the Show Cause Notice also. Apart from the merits, it is submitted by the learned Counsel that the Show Cause Notice is barred by limitation as there was no ground with the Respondent to allege suppression of the facts on the part of the Appellant and to invoke the extended period of limitation for 5 years. It is impressed upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having the MRP printed, even if given free of cost, the object thereof is the company‟s business promotion by increasing the number of subscribers. No question of principle of "quid pro quo", as asserted by the Appellant at all arises. While justifying the order under challenge and impressing upon that the plea of availability of extended period, learned D.R. has prayed for appeal to be dismissed. (i) After hearing both the parties, we are of the considered opinion that it is apparent and admitted that the SIM Cards which were given to the subscribers free of cost also had an MRP printed thereupon. It is also an admitted fact that the said free SIM Cards were sold by the distributor at the same price as has been printed thereupon to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the service provider in provision of service would form part of value of taxable service say out of pocket expense incurred and charged to the client." The question is - how the position regarding the value paid by the end subscribers in the supply chain of SIM cards initially sold by the telecom company can explain‟ any aspect regarding the expenditure. 8. Thus, Rule 5(1) and the explanation thereof were practically disjoint, these were used as independent Rules and thus the explanation does not attain any clarificatory nature. It is difficult to consider it retrospectively applicable. 9. As for the applicability of the case of Union of India vs. Martin Lottery Agencies Ltd. (2009) 14 STR 593 SC), there also the explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t - we have an explanation to a Rule which has been held Ultra Vires - even if we presume that the explanation was for removing doubts of the Rule, whether that will hold good would be a question. 11. Rest apart the above discussion the fact for the present case still remains is that the SIM Cards which the distributor received as free, has been sold on MRP, and since the MRP is inclusive of prices, therefore, demand has to be calculated by taking MRP as cum tax value in terms of Section 67(2) of the Finance Act, 1994. Resultantly, we find no infirmity vide the order upholding the demand though by wrongly relying upon explanation to Rule 5 and its retrospective effect. 12. With respect to imposition of interest and penalties, we are of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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