Appellant not liable for service tax on internet card sales due to incorrect application of Finance Act.

The Tribunal held that the appellant was not liable to pay service tax on the sale of internet cards for enabling internet access. The Tribunal found that the Commissioner (Appeals) erred in invoking Section 73(A) of the Finance Act, 1994, which was not in force during the relevant period. As there was no proposal to recover the amount under Section 73(A) in the show cause notice, it could not be applied later. The demand was deemed unsustainable, and the appeal was allowed, modifying the impugned order.

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Issues involved:
Whether the appellant is liable to pay service tax on the sale of internet cards for enabling internet access.

Analysis:
The appellant argued that selling internet cards is not a service activity, citing similar judgments regarding the sale of SIM cards. The appellant's representative highlighted that the demand was initially dropped under Section 73(1) but confirmed under Section 73(A) of the Finance Act, 1994. However, it was pointed out that Section 73(A) was not in force during the relevant period, and thus should not have been invoked by the Commissioner (Appeals).

The Revenue representative reiterated the findings of the impugned order, but the Tribunal noted discrepancies in the demand proposal under Section 73(1) and the subsequent confirmation under Section 73(A). The Tribunal emphasized that since there was no proposal in the show cause notice to recover the amount under Section 73(A), it could not be invoked later in the adjudicating or appellate order. Furthermore, as Section 73(A) was not in effect during the relevant period, the Commissioner (Appeals) erred in applying it.

Ultimately, the Tribunal concluded that the demand was not sustainable due to the incorrect invocation of Section 73(A) and the absence of an appeal by the Revenue against setting aside the demand under Section 73(1). Therefore, the impugned order was modified, and the appeal was allowed.

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