TaxTMI 
TaxTMI 
2022 (8) TMI 104
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....Twenty nine lakh Forty seven thousand seven hundred six) [Rs.1,26,72,490/- as service tax, Rs.2,50,661/- as education cess, Rs.24,555/- as secondary & higher education cess] only as demanded vide the instant four SCNs under Section 73(1) of Chapter V of the Finance Act,1994. (ii) I impose penalty amounting to Rs.1,29,47,706/- (Rs.One Crore Twenty nine lakh Forty seven thousand seven hundred six) only under Section 78 of the Finance Act, 1994. (iii) Under Section 76 of the Finance Act, I impose penalty of rupees two hundred for everyday during which the failure to pay the above tax continues or at the rate of two percent of the tax per month, whichever is higher, starting with the first day after the due date till the date of actual payment of the outstanding amount of service tax. However, the total amount of penalty under Section 76 shall not exceed the amount of tax demand as at (i) above. (iv) I impose penalty amounting to Rs.10,000/- under Section 77 of the Finance Act, 1994 for violation of Sections 69 & 70 of the Finance Act, 1994. (v) M/s Computer India, Court Road, Bye Lane, Ranchi- 834001 shall pay interest under ....
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....ommission to the distributors of BSNL. BSNL pays service tax on the face value of the card, which includes the discount/commission received by the distributors. The impugned demand is on the element of five per cent of the face value of the SIM card sold by the appellant. The original authority had studied the transaction adopting the value, commission and tax involving the sale of SIM card of face value Rs. 300/- as follows:- Face value of card Service Tax @ 10.2% Card value as sold to customer Commission to franchisee @ 5% Amount received from franchisee 300 (285+15) 30.06 (29.07+1. 53) [rounded of to 31 331 (300+31) 15 316 (285+31) 6. The appeal has challenged the demand on the basis that if at all an element of service is involved in the distribution of SIM cards procured from BSNL, the same is charged to service tax which is paid by BSNL. The distributors like the appellant receive part of the value of the SIM card, which has suffered service tax. The impugned demand on the commission element included in the taxable value is against the recognized principles of taxation. Moreov....
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....an referred above, to set aside the demand made. 6.1 The Bangalore Bench of this Tribunal in the case of Karakkattu Communications Vs. Commissioner of Central Excise, Cochin : 2007 (8) STR 164 (Tri.-Bang.) has held as follows : "3. We have gone through the cited final order. The findings recorded in para 2 are reproduced herein below. "2. I have heard both sides in the matter. I am of the considered opinion that the appellants were not carrying on the activity of Business Auxiliary Service. They have purchased BSNL post-paid/pre-paid Cellular Sim Cards and sold the same in the market. They have only received certain amount of profit which is ultimately a business practice when goods are sold in the market. The issue pertaining to levy of Sales Tax is already before the Apex court. There is no service carried out by the appellants but actually they have done the activity of purchase and sale which comes within the purview of "sale of goods‟ and sales tax is attracted. The Commissioner (appeals)‟s finding that the appellant is doing the activity of marketing and distribution of products and it comes within the....
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....atter. I am of the considered opinion that the appellants were not carrying on the activity of "Business Auxiliary Service. They have purchased BSNL post-paid/pre-paid Cellular Sim Cards and sold the same in the market. They have only received certain amount of profit which is ultimately a business practice when goods are sold in the market. The issue pertaining to levy of Sales Tax is already before the Apex court. There is no service carried out by the appellants but actually they have done the activity of purchase and sale which comes within the purview of "sale of goods‟ and sales tax is attracted. The Commissioner (Appeals) finding that the appellant is doing the activity of marketing and distribution of products and it comes within the ambit of Business Auxiliary Service is not a correct finding especially, in the light of the appellants having paid full value for the Sim Cards to the BSNL, and sold the same on the profit margin. The learned counsel points out to the correspondence with the BSNL, the appellants had on this issue, and the BSNL had clarified that they had already paid service tax on the sim cards sold to the appellants, this also clearly shows that the BS....
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....alue on which tax has been collected from the customer. The customer is, consequently, the recipient of the full value of services from none other than M/s. Bharat Sanchar Nigam Ltd.; thus, it is no different from the other two products. 8. The rationale for non-leviability of tax in relation to recharge and "top-up" coupons in Paragraph 26 in re GR Movers (supra) is as follows : "26. Though the correct procedure for discharge of the service tax liability by the two parties is that the distributors raise bills for commissions that is due to them along with service tax and BSNL takes Cenvat credit of tax paid by distributors for discharging liability on the telecommunication service provided by BSNL, such procedure dos (sic) not result in extra realization of Revenue. Considering the special nature of the impugned activities and the fact that it can be easily verified that full taxable value of the service provided by BSNL to customers is subjected to tax, we are of the view that there is no case to undo decisions already taken by the Tribunal in this regard. A contrary approach will result in a difference in value that is taxed for mobile telecom service acc....
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....t of consideration received by them from their customers on which consideration service tax is first discharged by BSNL. That is to say the transactions of both the parties are essentially one and payment on the full value of service occurs earlier than payment of commission to the distributor. Further payment of tax on full value of service rendered by the principal, that is BSNL, is easily verifiable unlike in the case of services rendered by many other sub-contractors for other type of services. 24. ... ... ... 25. Interestingly the above services as also the services of selling agent or a distributor of SIM cards or recharge coupon vouchers have been exempted from service tax vide entry No. 29 in Notification 25/2012-S.T., dated 20-6-2012. So, the special nature of services in such cass is recognized though only recently. 26. Though the correct procedure for discharge of the service tax liability by the two parties is that the distributors raise bills for commissions that is due to them along with service tax and BSNL takes Cenvat credit of tax paid by distributors for discharging liability on the telecommunication service p....