2018 (6) TMI 726 - AT - Service Tax

SIM card sales not taxable as Business Auxiliary Service under service tax rules.

M/s. Gowtham Marketing Versus CCE, Tirunelveli

The Tribunal held that the sale and purchase of SIM cards, recharge coupons, and starter packs by the appellants did not amount to Business Auxiliary ... Levy of service tax - recharge coupons - Department was of the view that the appellants are liable to discharge service tax on the recharge vouchers supplied to the customers by the appellant - Held that:- reliance placed in the case of GR. MOVERS AND MARTEND FOOD AND DEHYDRATES PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, LUCKNOW [2013 (6) TMI 339 - CESTAT NEW DELHI], where it was held that the levy of service tax cannot sustain - appeal allowed - decided in favor of appellant. Issues:- Liability to pay service tax on recharge vouchers- Interpretation of Business Auxiliary Service for sale and purchase of SIM cards, recharge coupons, and starter packsLiability to pay service tax on recharge vouchers:The case involved the appellants engaged in promoting DTH services and appointed as distributors for Consumer Premises Equipment (CPE) and Viewing Cards (VC) by a company. The Department alleged liability for service tax on recharge vouchers sold by the appellants. The original authority and Commissioner (Appeals) confirmed the demand. The appellant relied on a previous decision to argue against the liability. The Tribunal discussed the issue of whether the sale and purchase of SIM cards, recharge coupons, and starter packs would amount to Business Auxiliary Service and attract service tax. Referring to relevant precedents, the Tribunal held that the levy of service tax could not be sustained. The demand was set aside, and the appeal was allowed with consequential relief.Interpretation of Business Auxiliary Service for sale and purchase of SIM cards, recharge coupons, and starter packs:The Tribunal considered the issue of whether the sale and purchase of SIM cards, recharge coupons, and starter packs would constitute Business Auxiliary Service and be subject to service tax. Citing previous judgments, the Tribunal concluded that the demand for service tax needed to be set aside. The decision referenced rulings from various High Courts and emphasized that the department could not demand service tax based on distribution agreements. The Tribunal highlighted that the appellants had already paid VAT on the products sold, further supporting the conclusion to set aside the demand. The appeal was allowed with consequential relief, if any, in favor of the appellants.