2014 (9) TMI 460

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....the value of SIM Cards under Chapter V of Finance Act, 1994 if the service provider voluntarily paid sales tax on the value of SIM cards is justifiable when the assessing authorities decided that Service Tax is leviable upon the value of SIM cards under the provisions of Finance Act, 1994, enacted by the Parliament under the power vested upon it vide Entry 97 of Seventh Schedule to the Constitution? 2.      Whether the decision of the Tribunal that no Service Tax is leviable under the category of Telephone services on the value of SIM cards under Chapter V of Finance Act, 1994 is justified in view of the decision of the Hon'ble Supreme Court in the case of B.S.N.L. v. UOI [2006 (2) S.T.R. 161 (S.C.)] and the decisi....

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....ales tax. The assessee also contended that the show cause notice did not specify the category of taxable service in respect of which demand was raised. Considering the liability incurred under the Sales Tax enactment, the assessee contended that there was no liability to pay Service Tax. However, before the Customs, Excise and Service Tax Appellate Tribunal, the assessee pointed out to the decision reported in 2006 (2) S.T.R. 161 (S.C.) - Bharat Sanchar Nigam Ltd. v. Union of India, wherein the Supreme Court pointed out that if SIM Cards were goods on which sales tax had been levied they would not be exigible to Service Tax. The assessee also placed reliance on the decision in Idea Mobile Communication Ltd. v. CCE, Trivandrum - 2006 (4) S.T....

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.... levy of sales tax on the sale of SIM cards and held that SIM cards are considered part and parcel of services they provide. The charges paid by the subscribers for procuring a SIM card are generally processing charges for activating cellular phone and consequently, the same would be included in the value of the SIM card. The Apex Court further held that value of SIM cards forms part of activation charges as no activation is possible without a valid functioning of a SIM card and the value of the taxable service is calculated on gross total amount received by operator from subscribers. Thus, the entire value of the transaction i.e., value of activation charges plus value of SIM cards could be subjected only to Service Tax and not to Sales ta....