2018 (4) TMI 768 - AT - Service Tax

CESTAT rules distributor's telecom services not taxable as Business Auxiliary Service, but trading activity

CCE, Raipur Versus Sonthalia Cellular, BMS Marketing And Ajay Telecom

The Appellate Tribunal CESTAT NEW DELHI ruled in a case regarding the classification of services provided by a distributor of a telecom company under ... Business Auxiliary Service - respondent has been appointed as a distributor of the telecom company, M/s Bharati Airtel Ltd. for the purpose of distributing the pre-paid cellular services - Held that: - Tribunal in the case of Chotey Lal Radhey Shyam vs. CCE & ST, Lucknow [2015(11) TMI 979 - CESTAT ALLAHABAD] has held that the appellant is only engaged in trading activity and does not render any taxable service in the capacity of business auxiliary service - appeal dismissed - decided against Revenue. Issues involved: Classification of services under Business Auxiliary Service for a distributor of a telecom company.Analysis:The judgment by the Appellate Tribunal CESTAT NEW DELHI involved the classification of services provided by a distributor of a telecom company under Business Auxiliary Service. The respondent was appointed as a distributor of a telecom company for distributing pre-paid cellular services. The Department classified the services under Business Auxiliary Service, leading to a demand being confirmed against the appellant. The respondent appealed the adjudication order before the ld. Commissioner (Appeals), who set aside the demand, stating that the activity undertaken was not that of a commission agent and, therefore, could not be taxed under Business Auxiliary Service.Upon hearing both sides, the Tribunal found that the issue in the present dispute had already been settled in previous decisions. Referring to cases such as Chotey Lal Radhey Shyam vs. CCE & ST, Lucknow and M/s. Ascent Poly Films Pvt. Ltd. vs. CCE, Delhi, the Tribunal concluded that the appellant was engaged in trading activity and did not provide any taxable service under Business Auxiliary Service. Therefore, the Tribunal dismissed the appeals filed by the Revenue, as no service tax demand could be confirmed under the category of Business Auxiliary Service.In conclusion, the judgment clarified that the distributor's activities did not fall under the purview of Business Auxiliary Service, as established by previous decisions. The dismissal of the Revenue's appeals affirmed that no service tax demand could be upheld under such a classification.