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of <h1>High Court affirms Tribunal's decision on service tax penalty for SIM card sale</h1> <h3>COMMISSIONER OF SERVICE-TAX Versus BPL MOBILE COMMUNICATION LTD.</h3> The High Court of Bombay upheld the Tribunal's decision to set aside the penalty imposed on the respondent regarding service tax on the sale of a SIM ... Tribunal held that the issue as to the levy of service tax in respect of the sale of SIM card was not free from doubt and, therefore, penalty was not justified.- impugned order does not give rise to any substantial question of law - appeal is dismissed. Issues:- Tribunal setting aside penalty on respondent regarding service tax on sale of SIM card- Reference to judgments of Kerala High Court and Allahabad High Court by Tribunal- Supreme Court's decision on levy of sales tax on sale of SIM card- Dispute regarding judgment of Kerala High Court pending before Supreme CourtAnalysis:The High Court of Bombay, consisting of R.M. Lodha and J.P. Devadhar, JJ., heard the case where the Tribunal had set aside the penalty imposed on the respondent concerning the service tax on the sale of a SIM card. The Tribunal based its decision on the doubt surrounding the issue of levy of service tax on such a service. It referred to judgments of the Kerala High Court and Allahabad High Court. The Tribunal noted that the Allahabad High Court's decision had been overturned by the Supreme Court, while the issue before the Kerala High Court was pending before a Constitution Bench.During the proceedings, Mr. R.V. Desai, the senior counsel for the revenue, drew attention to a three-judge bench decision of the Supreme Court in the case of Bharat Sanchar Nigam Ltd. & another vs. Union of India & ors., (2006) 3 SCC 1. The Supreme Court emphasized that determining whether a SIM card is subject to sales tax depends on the intention of the parties involved. If the SIM card is integral to the service provided and not sold separately, it may not be subject to sales tax. The Supreme Court highlighted that insufficient material was available to make a definitive decision on the matter.The Supreme Court's decision primarily focused on the levy of sales tax on the sale of SIM cards to subscribers. Mr. R.V. Desai did not contest the fact that the judgment of the Kerala High Court was still awaiting the Supreme Court's final decision. Considering this legal backdrop, the High Court concluded that the Tribunal's decision to set aside the penalty was justified as the issue of service tax on the sale of SIM cards remained uncertain. The High Court found no substantial question of law arising from the impugned order and dismissed the appeal promptly.
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