TaxTMI 
TaxTMI 
2013 (11) TMI 918
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....s the rate of service tax was raised from 5% to 8% w.e.f. 13-5-2003 and the rate was further raised to 10% w.e.f. 10-9-2005. The appellant did not discharge service tax at the enhanced rates on the balance talk time available on such pre-paid cards/coupons. The differential tax on account of the rate changes amounted to Rs.20,97,757/-. It was also noticed that the appellant had collected advance rental on post-paid services provided on or after 14-5-2003 and 10-9-2004 and the differential service tax liability on account of such rentals amounted to Rs.5,74,129/-. Accordingly a show cause notice dated 25/04/2006 was issued to the appellant demanding differential service tax of Rs.1,99,22,580/- along with interest thereon and also proposing to impose penalties under the provisions of Finance Act,1994. The said notice was adjudicated vide the impugned order. The Adjudicating authority upheld the demands. However, he restricted the demand to Rs. 51,21,967/- in respect of the amount of Rs.1,73,95,879/- on the ground that the appellant had been audited by the department during April and May, 2004 and the financial records maintained by the appellant were scrutinized and therefore, suppre....
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....Tribunal in the case of Vigyan Gurukul [2012(55) STR 459 (Del)] wherein an identical issued was considered by this tribunal and it was held that subsequent rate changes does not affect the service tax liability and rate at the time of receipt of value of service is the relevant rate for charging service tax. Accordingly he pleads for setting aside these demands. 3.3 Alternatively, the ld. Counsel pleads that extended period of time is invokable as there is no suppression of facts in the instant case and therefore, the demand be restricted to the normal period of limitation. 3.4 The appellant also prays for setting aside the penalties imposed both under section 76 and under section 78 as there is no willful mis-statement or suppression of facts and hence penalty be waived under section 80. 4. The ld. Commissioner (AR) appearing for the Revenue strongly refutes the contentions of the appellant. He submits that the issue relating to whether SIM cards are goods or not has been settled in favour of Revenue by the decision of the Hon'ble High Court of Kerala in the case of Idea Mobile Communication Ltd. [2010] (19) STR 18 (Ker)] and by the hon'ble High Court of Andhra Pradesh in....
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....ales tax thereon. In order to consider whether the value of SIM card constitutes taxable service, we have to examine the functioning of this item in the service provided by the respondent. Admittedly SIM card is a computer chip having it's own SIM number on which telephone number can be activated. SIM card is a device through which customer gets connection from the mobile tower. In other words, unless it is activated, service provider cannot give service connection to the customer. Signals are transmitted and conveyed through towers and through SIM card communication signals reach the customer's Mobile instrument. In other words, it is an integral part required to provide mobile service to the customer. Customer cannot get service without SIM card and it is an essential part of the service. SIM card has no intrinsic value or purpose other than use in mobile phone for receiving mobile telephone service from the service provider. Therefore, in our view, the stand taken by the BSNL and BPL Mobile Services that it is not goods sold or intended to be sold to the customer but supplied as part of service is absolutely tenable and acceptable. Consequently, we hold that the value of SIM car....
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....the Supreme Court, in Idea Mobile Communication Judgment in Civil Appeal No.6319 of 2011 dated 4.8.2011, that the value of the SIM card forms part of the activation charges, service tax can alone be levied for such services, and not sales tax, the revisional/appellate/ assessing authorities have exceeded their jurisdiction in levying tax on pre-paid and post-paid SIM cards." In respect of Recharge Coupons/Vouchers, the hon'ble High Court held as follows:- "23. Even according to the Revenue, recharge coupons stand on the same footing as SIM cards. As the Supreme Court, in IDEA Mobile Judgment in Civil Appeal No.6319 of 2011 dated 4.8.2011, has held that SIM cards are not "goods" liable to tax under sales tax enactments, it must necessarily follow that recharge coupons cannot also be brought to tax under the Act. Once it is held that recharge coupons are not liable to tax under the Act, it matters little that the supply of recharge coupon is routed by the service provider through several distributors before it reaches the subscriber." 5.3. What emerges from the above decisions of the hon'ble Kerala and A.P. High Courts is that SIM cards/ Recharge Coupons are not....
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....ear that it is clear that it is the provision or rendering of the service which attracts the levy at the rate prescribed in Section 66. Only collection of the tax is to be done in the manner prescribed. In other words the Rules are to be framed only for the purposes of collection and not for the purposes of the levy. Rule 6 of the Service Tax Rules, 1944 provides that - "service tax shall be paid to the credit of the Central Government by the 5 th of the month immediately following the calendar month in which the payments are received, towards the value of taxable service." According to the appellant, it is the rate prevalent at the time of receipt of the consideration that is relevant. For example, if a service is rendered during the month of June in a year, and the consideration is received say in August and it is the rate prevalent in August that should be relevant. In other words, it is receipt of consideration that is relevant for determination of tax and not the levy. The argument is absurd. Receipt of consideration can either precede or succeed the provision or rendering of the service depending upon the agreement made between the parties. In a case where consideration is re....
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....rendered and not the time of rendering of the taxable service? (2) Whether or not, at the time of realization of payment for the taxable service provided, the provisions of Rule 2(i)(d)(iv) had come into force, making the service receiver liable for payment of service tax in respect of taxable services provided by a non-resident or a person who is from outside India and who does not have any office/establishment in India?" The hon'ble High Court answered the question as follows:- "4. The Service Tax, which has been imposed by way of Finance Act, 1994 (the Act), levies Service Tax as provided in Section 64(3) of the Act to all taxable services provided on or after commencement of Chapter 97 of the Act. Thus, the taxable event is providing all taxable services which has been defined by Section 65(105) of the Act. Similarly, the Rules, which have been incorporated as Chapter-98, define "person liable for paying the service tax under Rule 2(d) to mean in clause(iv), in relation to any taxable services provided by a person who is a non-resident or is from outside India, does not have any office in India, the person receiving taxable service in India. T....
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.... of tax prevalent on the date of rendering of service that is material and not the rate prevalent on the date of payment of tax. The reliance placed by the appellant in Vigyan Gurukul case is of no help as the said decision has not taken into the ratio of the various High Court and Supreme Court decisions on the subject as discussed above. In view of the above factual and legal position, we are of the considered view that the rate of tax that should apply in respect of service tax is the rate prevalent at the time of rendering of the service and not the rate prevalent at the time of receipt of consideration or the rate prevalent on the date of payment of tax as that would create uncertainties. The basic feature of a tax system is its certainty. Therefore, any interpretation that leads to uncertainties should be eschewed. 5.10 The next issue for consideration is whether the extended period of time could have been invoked for demand of service tax. The ld. Adjudicating authority has held that only normal period of time would apply in respect of demand of service tax on the gross amount charged as the records of the appellant had been audited by the Department and no suppression co....