C.C.E., Allahabad vs M/S. Capital T.V. Service Centre

1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether Lordships wish to see the fair copy of the order? Seen 4. Whether order is to be circulated to the Department Authorities? Yes

Application No.ST/CROSS/139/2009-CU[DB]

Appeal No.ST/391/2009-CU[DB]

[Arising out of Order-in-Appeal No.8-ST/ALLD/2009, dated 18.02.2009 passed by C.C.E.(Appeals), Allahabad]

C.C.E., Allahabad Appellant

Vs.

M/s. Capital T.V. Service Centre Respondent

Appearance

Shri M.R. Sharma, DR - for the appellant

Shri SS Dabas, Advocate - for the respondent

CORAM: Honble Justice G. Raghuram, President

Honble Mr. R.K. Singh, Member (Technical)

Final Order No.52552/2015, dated 23.07.2015

Per Mr. R.K. Singh :

Revenue has filed appeal against Order-in-Appeal dated 18/02/2009 which set aside the Order-in-Original dated 22.02.2008 in terms of which service tax demand of Rs.5,10,550/- for the period 01.07.2003 31.03.2006 was confirmed along with interest and penalties on the ground that the appellant did not pay service tax under Business Auxiliary Service (BAS) on the commission which the appellant received from BSNL for sale of recharge coupons and Sim cards. The primary adjudicating authority held that the appellant received the commission for marketing and distribution of BSNL telecom service in addition to sale of BSNL products and services including all types of post-paid and pre-paid services.

2. The Commissioner (Appeals) vide the impugned order held that purchase and sale of Sim cards/recharge coupons was not covered under BAS and set aside the primary adjudication order

3. The Revenue has contended that the activity of the appellant is covered under the definition of BAS given in Section 65 (19) of the Finance Act, 1994 and that as per the agreement between the appellant and BSNL the appellant has been appointed to do marketing and distribution of BSNL telecom service under its brand name and to discharge some obligations on behalf of BSNL such as maintain suitable organisation for marketing and distribution of products, carry out surveys, selling the BSNL product and registration of services of BSNL, answering queries relating to various facilities, value-added services, new launch schemes, promotion, future services demonstrating the service and products educating customers etc and that by virtue of all these factors the service rendered by the appellant to BSNL is covered under business auxiliary service.

4. The Ld. advocate on behalf of the respondent drew our attention to CESTAT Final Order No.ST/A/50337  50344/2014, dated 29.01.2014 in its own case in Appeal No. ST/1751/2011.

5. The ld. Departmental Representative while reiterating the contentions contained in Revenues appeal, also referred to the judgement of Supreme Court in the case of Idea Mobile Communications Ltd Vs. CCE, Cochin [2011 (23) STR 433 (SC)] and the judgement of CESTAT Delhi in the case of CCE, Meerut Vs. Moradabad Gas Service 2013 (31) STR (Tri.-Del.)] which also relied upon the judgement of Supreme Court in the case of Idea Mobile Communications Ltd (supra).

6. We have considered the submissions of both sides. We find that CESTAT order dated 29.01.2014 which was issued in respect of several appellants including the respondent in this case fully covers the issue in respondents favour. The said judgement of CESTAT refers to the judgement of Supreme Court in the case of Idea Mobile Communications Ltd Paragraphs 2,,4,5,6 and 7 of the said CESTAT order are reproduced below for easy reference:-

2.?The present appeal is filed against the judgment and order dated 4-9-2008 [2010 (19) S.T.R. 18 (Ker.)] passed by the Kerala High Court whereby and whereunder, the High Court allowed the appeal filed by the Commissioner of Central Excise & Customs, Cochin.

3.?The issue which arises for our consideration in this appeal is whether the value of SIM cards sold by the appellant herein to their mobile subscribers is to be included in taxable service under Section 65(105)zzzx of the Finance Act, 1994, which provides for levy of service tax on telecommunication service OR whether it is taxable as sale of goods under the Sales Tax Act.

4.?The facts leading to the filing of the present case are that during the relevant assessment years, i.e., 1997-1999, the appellant was selling the SIM cards to its franchisees and was paying the sales tax to the State and activating the SIM card in the hands of its subscribers on a valuable consideration and paying service tax only on the activation charges. The Department of Sales Tax, State of Kerala, included the activation charges as part of the sale consideration of SIM cards on the ground that activation is nothing but a value addition of the goods and thus comes under the definition of goods under the Kerala General Sales Tax Act, 1963 (hereinafter referred to as KGST Act) and accordingly levied sales tax on activation charges. The Department of Central Excise, Eranakulum (Service Tax Department) observed that a mere SIM card without activation is of no use and held that the appellant is liable to pay service tax on the value of SIM card also. In both the cases interest and penalty were levied.

5.?Being aggrieved, the appellant filed appeal before the respective appellate authorities under the KGST Act and Central Excise Act, 1944. There were consequential recovery proceedings against the appellant and the appellant filed Writ Petition O.P. No. 4973 of 2001 (P) in the High Court of Kerala challenging the levy of service tax on the sale price of SIM cards and also challenging the levy of sales tax on the amounts recovered by the appellant by way of activation charges from its customers which was dismissed vide order dated 15-2-2002.

6.?Aggrieved thereby, the appellant filed Civil Appeal No. 2408 of 2002 before this Court. Based on the judgment of the High Court dated 15-2-2002, the appellant also filed appeal before the Commissioner (Appeals), Customs and Central Excise which was dismissed vide order dated 8-4-2003. The appellant preferred appeal u/s 35B of Central Excise Act, 1944 before the Central Excise and Service Tax Tribunal (hereinafter referred to as TRIBUNAL) viz. Appeal No. ST/18/03 against the order dated 8-4-2003, in which the appellant did not challenge the levy of sales tax as the same was already paid.

7.?The aforesaid Civil Appeal No. 2408 of 2002 before this Court was heard and decided with appeals and Writ Petitions of several other telecom operators, including BSNL, BPL etc. and vide judgment reported as BSNL v. Union of India reported in (2006) 3 SCC 1 = 2006 (2) S.T.R. 161 (S.C.), the matter was remanded to the Sales Tax Authorities concerned for determination of issue relating to SIM cards. The Tribunal in the pending Appeal No. ST/18/03, vide order dated 25-5-2006 [2006 (4) S.T.R. 132 (Tri. - Bang.)], held that the levy of service tax in the case is not sustainable.

6. In the light of the said precedent ( in the respondents own case ) extensively quoted above, we find no merit in Revenues appeal and the same is dismissed

(Justice G. Raghuram)

President

(R.K. Singh)

Member (Technical)

SSK

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