Customs, Excise and Gold Tribunal - Tamil Nadu
Bpl Mobile Cellular Ltd. (Hutchison ... vs Commissioner Of Central Excise (St) on 29 June, 2007
Equivalent citations: 2007[8]S.T.R.546, [2008]12STT442, (2008)13VST302(CESTAT-CHENNAI)
ORDER P.G. Chacko, Member (J)
1. After examining the records and hearing both sides, we are of the view that the assessee's appeal requires to be disposed of. Accordingly, after dispensing with predeposit, we take up the appeal for final disposal. At this stage, we take note of the pendency of appeal No. S/131/2007 filed by the Department against the same order of the Commissioner (Appeals). The Department's appeal also is being taken up for final disposal.
2. The assessee's appeal is against demand of differential service tax of Rs. 7,82,385/- for the period July 2003 to February 2004 as also against penalties imposed on them under Sections 76 and 77 of the Finance Act, 1994. The Revenue's appeal is against the dropping of another penalty which had been proposed in the show-cause notice and imposed by the original authority. That penalty was under Section 78 of the said Act.
3. The appellants are registered with the Department in the category of telephone service. During the aforesaid period, they had sold pre-paid SIM cards to their dealers/distributors against payment of price below MRP and the latter, in turn, sold the cards to subscribers at MRP. The appellants paid service tax on the sale price received by them. In the relevant show-cause notice, the Department alleged that service tax was liable to be paid on MRP as gross amount under Section 67 of the Finance Act, 1994. This demand was contested. In adjudication, the original authority confirmed the demand of differential tax and imposed penalties. Ld. Commissioner (Appeals) vacated the Section 78 penalty and sustained the rest of the decision of the lower authority. The present appeals are directed against the appellate Commissioner's order.
4. Ld. Consultant for the assessee submits that they were liable to pay service tax only on the consideration received by them for the sale of the SIM cards to their dealers/distributors. It is submitted that, under Section 67 as this provision stood at the material time, the value of taxable service was the gross amount charged by the service-provider for such service. The assessee paid tax on such value and nothing more is liable to be paid. Ld. Consultant, in this connection, relies on the Tribunal's decision in Tempest Advertising (P) Ltd. v. CCE, Hyderabad 2007 (5) STR 312 (Tri.Bang), wherein it was held that the actual amount received by the service provider for the service rendered to his customer would alone constitute the value of taxable service for the purpose of Section 67 and that any amount due from the customer would not be includible in the taxable value. Ld. SDR, on the other hand, reiterates the findings contained in para 4.3 of the impugned order.
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 Tribunal's 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 assessee's 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 Revenue's appeal for imposing penalty is dismissed.
(Dictated and pronounced in open court)