Commission on SIM card sales not taxable under business auxiliary service; Tribunal rules in favor of appellant.

The Tribunal held that the commission received by the appellant in connection with the sale of SIM cards was not liable to service tax under business auxiliary service as the appellant's relation with the principal client was on a principal-to-principal basis, engaging in trading activity. Citing precedents, the Tribunal allowed the appeal, stating the issue had been settled in favor of the assessee. The impugned order was set aside, and the appeal was allowed.

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Issues involved:
The issue involved in the present case is whether the commission received by the appellant from their principal client in connection with the sale and purchase of SIM cards is liable to service tax under the head of business auxiliary service.

Judgment Summary:

Issue 1: Liability of service tax on commission received

The appellant contended that since the commission received was included in the gross sale price of the SIM cards, on which service tax was already paid, no separate service tax could be demanded on the commission. The Tribunal found that the appellant's relation with the principal client was on a principal-to-principal basis, and the appellant was engaged in trading activity, not providing taxable services under "business auxiliary service." Citing various judgments, including Chotey Lala Radhey Shyam Vs. CCE & ST, Lucknow, the Tribunal set aside the impugned order and allowed the appeal with consequential relief.

Issue 2: Judicial precedents and findings

The Tribunal referred to previous decisions where similar controversies arose, such as the case of Daya Shankar Kailash Chand v. Commissioner of C. EX. & S. T., Lucknow, where the Tribunal held that the activity of purchase and sale of SIM cards, where service tax was already paid by the principal client, did not amount to providing business auxiliary services. The High Court upheld the Tribunal's decision, emphasizing that no substantial question arose in the appeal. The Tribunal, following these judgments, dismissed the appeal against the revenue, stating that the issue had already been settled in favor of the assessee.

Conclusion:

Based on the analysis of submissions and records, the Tribunal found that the issue was no longer res integra and was settled in favor of the assessee. Consequently, the impugned order was set aside, and the appeal was allowed.

(Pronounced in the open court on 21.06.2023)

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