Ait-2014-22-cestat

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL: NEW DELHI

Versus

AIT Head Note: the activity of purchase and sale of Recharge Coupons & Sim Cards belonging to BSNL, where BSNL had discharged the full value of Sim cards, does not amount to providing Business Auxiliary Service

DATE OF HEARING : 29/01/2014.

Coram: Justice G. Raghuram, President and Shri Rakesh Kumar, Member (Technical)

Service Tax Stay Application No. 2214 of 2011 with Misc. Application No. 58887 of 2013 in Appeal No. 1062 of 2011,

Service Tax Stay Application No. 3672 of 2011 in Appeal No. 1751 of 2011,

Service Tax Stay Application No. 1554 of 2012 in Appeal No. 642 of 2012,

Service Tax Stay Application No. 1553 of 2012 in Appeal No. 641 of 2012,

Service Tax Stay Application No. 1556 of 2012 in Appeal No. 644 of 2012,

Service Tax Stay Application No. 1555 of 2012 in Appeal No. 643 of 2012,

Service Tax Stay Application No. 2182 of 2012 in Appeal No. 862 of 2012 and

Service Tax Stay Application No. 4007 of 2012 in Appeal No. 3144 of 2012

[Arising out of the Order-in-Appeal No. 114/ST/ALLD/2011 dated 09/09/2011 passed by The Commissioner Central Excise & Service Tax, Allahabad.]

S/Shri Prabhat Kumar, Bipin Garg, Vineet Kumar Singh and Jatin Mahajan, Advocates for the appellants.

Shri Govind Dixit, Authorized Representative (DR) for the Respondent.

F I N A L O R D E R No. 50337-50344/2014 Dated : 29/01/2014

Per. Justice G. Raghuram :-

At the stage of consideration of the stay applications, we notice that the issues presented in the substantive appeals are covered by the judgment of this Tribunal in final order dated 06/11/12 in Service Tax appeal Nos. 684 to 687 of 2012- CU (DB), an appeal preferred by M/s Martand Food & Dehydrates Pvt. Ltd. vs. CCE, Kanpur. Hence we waive pre-deposit and dispose of the appeals.

2. Since identical issues arising in all these appeals, except for the periods of the transactions in issue, we consider the facts in Service Tax appeal No. 1751 of 2011 as representing the relevant facts common to all the appeals.

Service Tax Appeal No. 1751 of 2011 :-

The appellant is the assessee and is admittedly engaged in purchase and sale of pre-paid Sim Cards and Recharge Coupons of various denominations for mobile phones of M/s Bharat Sanchar Nigam Ltd. (BSNL). The assessee entered into an agreement dated 12/01/2005, with BSNL termed as a “Franchiseeship Agreement”. Proceedings were initiated by a show cause notice dated 05/10/09, alleging receipt of commission from M/s BSNL for selling pre-paid Sim Cards and Recharge Coupons to eventual users; that the activity comes within the ambit of Business Auxiliary Service defined in Section 65 (19) of the Finance Act, 1994 and enumerated as a taxable services in Section 65 (105) (zzb) of the Act; that during 01/4/08 to 31/03/09, the assessee received Rs. 33,98,014/- from BSNL as commission; had neither obtained registration under the Act nor remitted service tax; and should therefore show cause why the specified amount of service tax, interest and penalties be not levied and collected. After a due process, the Assistant Commissioner of Customs, Central Excise & Service Tax, Allahabad passed the adjudication order dated 29-31/12/2010 confirming service tax demand of Rs. 4,12,752/- apart from interest and penalties under Sections 77 and 78 of the Act.

3. Aggrieved thereby, the assessee preferred an appeal, which was rejected in toto by the Commissioner (Appeals), Central Excise, Allahabad, vide the order dated 09/09/2011.

4. Several decisions of this Tribunal, both prior and subsequent to the decision of the Supreme Court in Idea Mobile Communications Ltd. vs. CCE, Cochin reported in 2011 (23) S.T.R. 433 (S.C.) had allowed appeals preferred by identically circumstanced assessees who had been vending pre-paid and recharge coupons for BSNL. Reference may be made to the final order dated 06/11/2012 in Martand Food & Dehydrates Pvt. Ltd. It is to be noticed that in Martand Food & Dehydrates Pvt. Ltd., on primarily analysis, the Tribunal rejected the contention by the appellant therein that there was no liability to remit service tax since BSNL had been assessed and remitted service tax on its output service which was the taxable Tele-communication service and since service tax under that taxable category was discharged by BSNL, the same consideration out of which commission is paid to the appellant M/s Martand Food & Dehydrates Pvt. Ltd. cannot be brought to tax under a different taxable category, as Business Auxiliary Service. In para 26 of the said decision this Tribunal negated this contention and observed that the correct procedure for discharge of service tax liability by the two parties [the appellant and BSNL] is that the distributors should raise bills for commissions due to them alongwith the service tax component and BSNL should take Cenvat credit of the tax paid by distributors for discharging liability; and that such procedure does not result in realization of additional revenue. However, this Tribunal concluded that considering the special nature of the impugned activities and the fact that it can be easily verified that the full taxable value of the service provided by BSNL to customers had been subjected to tax, there is no case or justification to undo the 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 according to the decision in Commissioner vs. BPL Mobile Cellular Ltd. reported in 2011 (24) S.T.R. J175 (S.C.).

5. The decision in M/s Martand Food & Dehydrates Pvt. Ltd. is reiterated in Daya Shankar Kailash Chand vs. CCE & ST, Lucknow reported in 2013 (30) S.T.R. 428 (Tri.- Del.).

6. We are informed; and a copy of the judgment of the Allahabad High Court, Lucknow Bench is produced for our perusal, that appeals preferred by Revenue against decisions of this Tribunal, rendered in identical circumstances in M/s G.R. Movers, Roshanganj, Shahjahanpur; M/s Daya Shankar Kailash Chandra Mallawan Distt. Hardoi (U.P.) and M/s Rama Infotech, Hazaratganj, Lucknow were dismissed by the Allahabad High Court, Lucknow Bench, on the ground those decisions were covered by the judgment in M/s Martand Food & Dehydrates Pvt. Ltd., wherein it was held the activity of purchase and sale of Sim Cards belonging to BSNL, where BSNL had discharged the full value of Sim cards, does not amount to providing Business Auxiliary Service and no interference was called for. Though we notice that Martand Food & Dehydrates Pvt. Ltd. did not perhaps conclude that services provided by distributors to the BSNL does not amount to Business Auxiliary Service, we are bound by the interpretation of Martand Food & Dehydrates Pvt. Ltd. as confirmed by the Allahabad High Court decision.

7. For the aforesaid reasons, we allowed the appeals, which present relevant circumstances which are identical to the facts and circumstances in service tax appeal No. 1751 of 2011, facts which were adverted to in Martand Food & Dehydrates Pvt. Ltd. as well; and quash the respective impugned orders-in-appeal.

(Dictated and pronounced in open court)