TaxTMI 
TaxTMI 
2018 (5) TMI 410
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....mmunication Services is engaged in providing telecommunication services. In terms of agreement with M/s Reliance Communication the Appellant is providing marketing/ distribution services of telecommunication services. They are authorized to collect the sums due from the customers/ subscribers in the capacity of agent of M/s Reliance and also authorized to bundle their own services and products alongwith tariff plans of M/s Reliance. The Appellant is also engaged in business of purchase/ sale of Sim Cards to various distributors across the country under an agreement with such persons. 3. Vide show cause notice dt. 18.10.2013 issued on the basis of audit conducted by the revenue, the Appellant were called upon to pay service tax alongwith interest and penalty on the ground that the sale of Sim cards is taxable communication services provided to the customer as said service has been provided on behalf of M/s RCOM. The value of Sim cards shall form part of the activation charges as no activation is possible without the provision of Sim cards. The provision of SIM cards to distributors/ end users on behalf of RCOM is thus taxable entry under Telecommunication service. The adjudicatin....
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....ers who are interested in availing of the services to be provided by RCOM. He cites the relevant paras as under: "[ ] 1. Product shall mean and include 'Handsets, Fixed Wireless Phones, Data Cards, Recharge Vouches, Get Started Kits, SIM Cards telecom accessories and any other telecommunication product that maybe notified to the distributor by RCIL from time to time. [ ] 2.1 The Distributor shall sell or distribute the Product in the areas as defined by RCIL [ ] 5.8 The Distributor shall maintain records of transaction, details of CAF, RSN and any other details as required by RCIL and shall prepare and forward them as requested by RCIL in physical or electronic format or as direct input in one or more of RCIL's information systems, as RCIL deems necessary. [ ] 5.13 Upon acceptance of the order by RCIL, RCIL shall use its reasonable efforts to supply of the Products. [ ]" He submits that the above activity of provision of hardware products to distributors for their onward distribution to customer is distinct and separate activity carried out by them on their own account. Once the sale of comm....
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....ive Pvt. Ltd. vs. Commissioner of Commercial taxes 2008 (9) ETR 337 wherein it was held that Service Tax and VAT exclude each other and cannot be levied concomitantly on transaction. He submits that during the period involved there were various interpretations of the issue and hence extended period cannot be invoked. He relies upon the order in case of Bharti Airtel Ltd. Vs. CCE, Delhi 2012 - TIOL - 910- CESTAT - DEL and Bharti Televentures Ltd. Vs CST, Chennai 2012 (24) Taxmann.com 254 (Chennai - CESTAT). He also relies upon the Apex Court judgment in case of Pahwa Chemicals Pvt. Ltd. Vs. CCE 2005 (189) ELT 257 (SC), Anand Nishikawa Co. Ltd. Vs. Commissioner 2005 (188) ELT 149 (SC). 5. Shri Roopam Kapoor, Id. Commissioner, A.R. Shri Rishi Goyal, Id, Additional Commissioner, AR appearing for the revenue submits that in view of Hon'ble Supreme Court judgment in case of Idea IDEA MOBILE COMMUNICATION LTD. Vs. COMMR. OF C. EX. & CUS., COCHIN 2011 (23) S.T.R. 433 (S.C.) the issue is squarely settled that the sale of SIM cards is liable for Service Tax. He also submits that the tax has been avoided by showing sale of sim card through the Appellant which is group company and it is pla....
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....nt on sale of Sim cards on which appropriate VAT has been paid. Pertinently the payment of VAT has been assessed by the VAT authorities and accepted as valid payment. We find that Sim cards are sold by the Appellant to the distributors who in turn sell it to the customers and unless interfaced and integrated with the RCOM's telecom network activated after sale by the distributors to the customers the Telecommunication services do not commence. Thus the telecommunication service commences only after handset and sim card is interfaced and integrated with the RCOM/s telecom network which is only post payment of subscription amount by the subscribers who opts to avail RCOM's service. The Appellant has principal to principal agreement with the distributors for sale of sim cards. The consideration towards sim cards is being retained by the Appellant and no amount is paid to RCOM on account of such sale. The Sim cards reach the subscribers only after two transactions of sale i.e first from the Appellant to the distributor and second after sale from Distributor to subscriber. Thus even before the Sim card reaches the customer and he is recognized as subscriber, the property is transferred ....
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....he assessing authority under the Sales Tax Act dropped the proceedings after conceding the position that 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 authorities have themselves conceded the position before the High Court that no assessment of sales tax would be made on the sale value of the SIM Card supplied by the appellant to their customers irrespective of the fact whether they have filed returns and remitted tax or not. It also cannot be disputed that even if sales tax is wrongly remitted and paid that would not absolve them from the responsibility of payment of service tax, if otherwise there is a liability to pay the same. If the article is not susceptible to tax under the Sales Tax Act, the amount of tax paid by the assessee could be refunded as the case may be or, the assessee has to follow the law as may be applicable. But we cannot accept a position in law that even if tax is wrongly remitted that would absolve the parties from paying the service tax if t....