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of <h1>Tribunal rules against service tax on telecom commission, citing precedent</h1> <h3>M/s Anand Sales Corporation and others Versus CCE, Kanpur, Allahabad and Lucknow</h3> The Tribunal held that the appellant's activity of selling pre-paid SIM cards and recharge coupons did not constitute Business Auxiliary Service as the ... Levy of service tax on receipt of commission from M/s BSNL for selling pre-paid Sim Cards and Recharge Coupons to eventual users - Held that:- activity of purchase and sale of Sim Cards belonging to BSNL, where BSNL had discharged the full value of Sim cards, does not amount to providing Business Auxiliary Service and no interference was called for. - Decided in favor of assessee. Issues:1. Whether the appellant's activity of selling pre-paid SIM cards and recharge coupons constitutes Business Auxiliary Service under the Finance Act, 1994Rs.2. Whether the appellant is liable to pay service tax for receiving commission from the sale of pre-paid SIM cards and recharge couponsRs.3. Whether the decisions of the Tribunal and High Court in similar cases are applicable to the present appealRs.Issue 1: Business Auxiliary Service ClassificationThe appellant, engaged in selling pre-paid SIM cards and recharge coupons for a telecom company, was alleged to be providing Business Auxiliary Service. The Tribunal analyzed previous cases and observed that the service tax liability should be discharged by distributors by raising bills for commissions along with the service tax component. The Tribunal concluded that the appellant's activity did not amount to providing Business Auxiliary Service as the telecom company had already discharged service tax on its output service. The Tribunal upheld this interpretation based on the decision in Commissioner vs. BPL Mobile Cellular Ltd.Issue 2: Service Tax LiabilityThe appellant received a show cause notice for not remitting service tax on the commission received from the telecom company. The Assistant Commissioner confirmed the service tax demand, interest, and penalties. The Commissioner (Appeals) rejected the appellant's appeal. However, the Tribunal, considering the special nature of the activity and past decisions, found no justification to levy service tax on the appellant. The Tribunal referenced similar cases where the High Court dismissed appeals against Tribunal decisions, reinforcing that the appellant's activity did not amount to Business Auxiliary Service.Issue 3: Applicability of Previous DecisionsThe Tribunal referred to previous judgments, including the decision in Martand Food & Dehydrates Pvt. Ltd., which was reiterated in subsequent cases. The Tribunal noted that the High Court upheld decisions where activities similar to the appellant's were not classified as Business Auxiliary Service. Despite some nuances in the interpretations, the Tribunal followed the consistent stance taken in previous cases and allowed the appeals, quashing the impugned orders-in-appeal.This judgment clarifies the classification of services provided by the appellant and the corresponding service tax liability. It emphasizes the importance of consistent interpretation of tax laws based on precedents and specific circumstances of each case. The Tribunal's decision provides clarity on the applicability of Business Auxiliary Service in the context of selling telecom products and reinforces the need for proper tax discharge mechanisms between parties involved in such transactions.
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