2015 (11) TMI 979

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....on the profit margin earned by the appellant during the course of trading of sim cards and recharge coupon of Bharat Sanchar Nigam Ltd. (BSNL) thereby upholding the demand of service tax amounting to Rs. 1,21,71,306/- along with penalty under Section 78, 77(1)(a) and (c) of the Finance Act, 1994. Aggrieved by the said order, the appellant is before us by way of present appeal. 2. Brief facts of the case are that M/s. Chotey Lal Radhey Shyam was appointed as a franchisee for Lucknow by BSNL for the sale of sim cards and recharge coupons of BSNL, who in turn, sells the same through network of retailers, which amounts to trading activity and the appellant has not provided any service to BSNL and the alleged agreement between him and the BSN....

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.... of Central Excise, Lucknow 2013 (30) STR 634 (Tri.Del.) wherein the hon'ble Tribunal has held that service tax is not payable on the commission paid by BSNL out of the value of services for which BSNL has already paid service tax. The Tribunal in this case relied upon the following judgments: (i) Chetan Traders v. CCE 2008 (17) STT 318 (New Delhi-CESTAT) (ii) Hindustan Associated Traders v. CCE -[Final order Nos. 673 & 674 of 2007, dated: 7-6-2007] (iii) South East Corpn.v.CCE & ST 2009 (22) STT 446 (Bang.-CESTAT) (iv) Karakattu Communications v. CCE 2009 (21) STT 384 (Bang.-CESTAT) 4. Revenue filed appeal against the decision of the Tribunal in the case of G.R. Movers (supra) before the Allahabad....

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....nature of business auxiliary service is being rendered by appellants to BSNL. He draws attention to some clauses from the agreement showing General Obligations of the Franchisee and Responsibilities of the Franchisees and procedure for payment of commission/rewards/marketing expenses as given in the agreement are reproduced below:- "(a) The BSNL is desirous of appointing Distributors with a view to do marketing and distribution of its Cellular Mobile Telephone Services (CMTS) under its brand name for which the BSNL has been licensed to provide cellular mobile service. (b) The Distributor has approached the BSNL for authorising it to act as such an authorised Distributor for marketing and distribution of cellular mobile ser....

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....ces in the territory as described in Annexure- F from the Dealer outlet(s) for which the BSNL will compensate the distributor as described," "9. General Obligation of the Distributor: 9.1 The Distributor shall maintain a suitable organisation for the marketing and distributor of products and services in the allocated territory from his outlet(s). 9.2 The BSNL may from time to time require the distributor to carry out customer satisfaction surveys as decided by the BSNL, the cost thereof if any will be borne by the distributor." 9.7 (a) That the Distributor shall not have any authority to store, sell or transfer or in anyway dispose of the merchandise except as provided in this Agreement (b) that the BSNL ....