TaxTMI 
TaxTMI 
2012 (9) TMI 893
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....e the order dated May 14, 2007 passed by the Joint Commissioner of Commercials Taxes (Appeals), Bangalore (hereinafter referred to as "the appellate authority"). 2. The appellant is the public limited company and also registered under the provisions of the Karnataka Value Added Tax Act, 2003 (hereinafter referred to as "the KVAT Act") engaged in the activity of rendering services of cellular mobile telephones to its subscribers, as per the licence granted by the Department of Telecommunication, Government of India. As per the said licence, the appellant is permitted to maintain and operate cellular mobile telephone services up to the subscriber's terminal connection in the State of Karnataka. In the course of its business, the appell....
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....er 7, 2005. 3. Being aggrieved by the said levy of penalty, the appellant preferred an appeal before the Joint Commissioner for Commercial Taxes (Appeals), Bangalore. The appellate authority by its order dated May 14, 2007 allowed the appeal and held that the goods under movement being not taxable under the Sales Tax Act, the question of levying tax under the Karnataka Value Added Tax Act does not arise. Recharge cards, recharge pins and recharge double scratch are not the goods. However, the revisional authority on verification of the records found that the order passed by the appellate authority is erroneous and prejudice to the interest of the revenue. Accordingly issued notice under section 64(1) of the Act. The appellant filed detai....
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....ulars, etc. Hence there is no violation of provisions of the Act. He also relied upon the judgment reported in [2011] 43 VST 1 (SC); [2011] 10 GSTR 12 (SC); [2012] 72 KLJ 65 (SC) Idea Mobile Communication Ltd. v. Commissioner of Central Excise and Customs, Cochin) in paras 17, 18 and 19 contending that the amount received by the cellular telephone company from its subscribers towards the SIM cards will form part of the taxable value for levy of service tax and the SIM cards are never sold as goods independent from service provided. They are considered as part and parcel of the service provided and the dominant position of the transaction is to provide service and not to sell materials. The SIM card has no value, it is only for identificatio....
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....s and in the circumstances of the appellant's case, can it be held that the order dated May 14, 2007 passed by the first appellate authority in VAT. Ap. No. 57/05-06 under section 62(6) of the Act, was erroneous and prejudicial to the interests of the Revenue for the revisional authority to have invoked the extraordinary revisional powers conferred under section 64(1) of the Act? (ii) Whether, on the facts and in the circumstances of the appellant's case, can it be held that the order dated August 12, 2009 passed by the revisional authority in SMR. No. 20/08-09 under section 64(1) of the Act is valid in law especially in view of the fact that the said order has been passed in gross violation of the principles of natural justice i....
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....s 8 and 9 in 43 VST): "17. The High Court has given cogent reasons for coming to the conclusion that service tax is payable inasmuch as SIM card has no intrinsic sale value and it is supplied to the customers for providing mobile service to them. It should also be noted at this stage that after the remand of the matter by the Supreme Court to the sales tax authorities the assessing authority under the Sales Tax Act dropped the proceedings after conceding the position that the SIM card has no intrinsic sale value and it is supplied to the customers for providing telephone service to the customers. This aforesaid stand of the sales tax authority is practically the end of the matter and signifies the conclusion. 18. The sales tax authori....
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....ived by the cellular telephone company from its subscribers towards the SIM card will form part of the taxable value for levy of service tax, for the SIM cards are never sold as goods independent from services provided. They are considered part and parcel of the services provided and the dominant position of the transaction is to provide services and not to sell the material, i.e., SIM cards which on its own but without the service would hardly have any value at all. Thus, it is established from the records and facts of this case that the value of SIM cards forms part of the activation charges as no activation is possible without a valid functioning of the SIM card and the value of the taxable service is calculated on the gross total amount....