Commissioner Of Service Tax vs Tata Tele Services Ltd

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. II

APPEAL NO. ST/79, 179/10  Mum

Arising out of Order-in-Appeal No. 4/Review/CCO-I/MCX/2010 dated 16.02.2010 and 18/KLG/Th-II/2009 dated 31.12.2009 passed by the Commissioner of Central Excise (Appeals), Mumbai.

For approval and signature:

Shri. M.V. Ravindran, Member (Judicial) Shri. P.R. Chandrasekharan, Member (Technical)

1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

Commissioner of Service Tax, Mumbai : Appellant

Versus

Tata Tele services Ltd.

Respondent

Appearance

Shri D. Nagvenkar, Addl. Commr (A.R.) for appellant Shri Prakash Shah, Advocate For Respondent

CORAM:

Shri. M.V. Ravindran, Member (Judicial) Shri. P.R. Chandrasekharan, Member (Technical)

Date of Hearing : 11.03.2015 Date of Decision : 11.03.2015

ORDER NO.

Per : M.V. Ravindran These two appeals are disposed of by a common order as the issue involved is the same and in respect of the same assessee. Revenue has filed these two appeals against the impugned order which has dropped the demands raised on the respondents.

2. The relevant facts that arise for consideration are that the respondents were engaged in providing telephone services including cellular phone services to the subscriber within India under licence from the Department of Telecommunications and were registered with the Service Tax authorities at Mumbai and were discharging service tax liabilities. Respondents were providing prepaid services to their subscribers of cellular phone services and collected payment for such services through prepaid cards and Recharge vouchers. The prepaid cards and Recharge vouchers were sold in physical form through distributors, retailers and electronically through two Companies. MRP is printed on these Recharge vouchers and the prepaid coupons. It is alleged in the show-cause notice that there was a short payment of tax as the respondent had not arrived at the correct value for discharging the service tax liability on the ground that the respondents had discharged the service tax liability on the Recharge vouchers and SIM cards sold through dealers and an amount which they received through dealers. It was also alleged that the short payment was noticed by the department on a specific intelligence. The show-cause notice was adjudicated by the authority and the adjudicating authority dropped the demands raised on an amount which was held as under-valued by relying upon the decision of the Tribunal in the case of BPL Mobile Cellular Ltd. vs. CCE Coimbatore  2007 (8) STR 546 (Tri. Chennai).

3. Learned D.R. after taking us through the show-cause notice and the Order-in-Appeal would submit that the respondent sells the Recharge Vouchers and SIM cards directly to the subscribers consider the entire amount mentioned as MRP; for discharge of service tax liability based upon the value as arrived from MRP which according to him is correct and undisputed while the service tax liability on the Recharge Vouchers and SIM cards sold through distributors/dealers network; the respondent is considering the amount received by them from such distributors and dealers for discharging the service tax liability, is being objected by the department. It is his submissions that the Honble Apex Court in the case of Idea Mobile Communication Ltd.  2012 (26) STR 27 (Tri.  Del) has categorically held that the amount received by the Cellular Telephone Co. from its subscribers towards the sale of SIM Cards will form part of the taxable value and the Service Tax liability is to be calculated on gross total amount received from subscribers.

4. Learned Counsel appearing on behalf of the respondent would submit that very same issue was agitated before the Tribunal in the BPL Mobile Cellular Ltd. (supra). He would submit that the Co-ordinate bench of the Tribunal has categorically held in favour of the assessee and produces copy of the said order and also the copy of the order wherein the Honble Apex Court has dismissed the civil appeal filed by Revenue against such order.

5. We have considered the submissions made at length by both the sides and perused the records.

6. The issue involved in this case is whether the respondent is required to discharge the service tax liability on the amount which they have received from the distributors and dealers or on the MRP on which the subscribers purchases Recharge Vouchers and SIM Cards from the distributors or dealers. Undisputed facts are that the respondents have discharged the service tax liability on the basis of MRP to the ultimate subscribers after the Recharge Vouchers and SIM Cards as and when sold directly to the subscribers; the respondent also discharged the service tax liability on the actual amount received by them from the distributors and dealers for the sale of Recharge Vouchers and SIM Cards from such distributors and dealers.

7. We find that the lower authority was correct in following the law as laid down by the Tribunal in the case of BPL Mobile Cellular Ltd. (supra). On perusal of the order, we find that very same issue was being agitated before the Tribunal. After considering the submissions made before the Bench, the Bench held as under:-

5. After giving careful consideration to the submissions, we note that ld. Commissioner (Appeals) misdirected himself by quoting from the text of Section 67 as this provision stood prior to the period of dispute. According to the amended provisions of Section 67, the value of any taxable service shall be the gross amount charged by the service-provider for such service rendered by him. In instant case, the amount charged by the assessee (service-provider) is the amount received by them from dealers/distributors and nothing extra was charged by the appellants. Admittedly, Service tax was paid on this amount. There are a few elements specified in the Explanation to Section 67, as includible in the value of taxable service. The Revenue has no case that any of these elements is applicable to the appellants. The Tribunals decision in Tempest Advertising (supra) is clearly in support of the appellants.

6.?It is true that the service rendered by the appellants by way of sale of pre-paid SIM cards was ultimately received by the subscribers. However, where the law prescribes the value of taxable service to be the gross amount charged by the service-provider, Service tax can be levied on that amount only. In the result, the assessees appeal succeeds and the same is allowed. Now that assessee has been held not liable to pay any differential Service tax, they have no penal liability. Therefore, the Revenues appeal for imposing penalty is dismissed.

Aggrieved by such an order, Revenue filed a Civil Appeal before the Honble Apex Court and the Honble Apex Court dismissed the Civil Appeal on 01.02.2008 after condoning the delay. The said dismissal is reported at 2011 (24) STR J175 (SC). As the dismissal of Civil Appeal tantamount to order of Apex Court on the self same issue in favour of the assessee, we have to follow the same; reliance placed by the learned A.R. on the decision of the Apex Court in the case of Idea Mobile Communication Ltd. (supra) may not carry the case of the Revenue any further. In view of the foregoing and the authoritative judicial pronouncement, we hold that the impugned orders are correct, legal and do not suffer from any infirmity. The appeals are rejected being devoid of merits.

(Dictated in open Court)

(P.R. Chandrasekharan) Member (Technical)

(M.V. Ravindran) Member (Judicial) nsk ??

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