Custom, Excise & Service Tax Tribunal
Mr. B.P. Jain vs Commissioner Of Central Excise, Nashik on 24 February, 2016
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. I APPEAL NO. ST/664/10-Mum (Arising out of Order-in-Appeal No. AKP/238/NSK/2010 dated 17.08.2010 passed by the Commissioner of Central Excise & Customs (Appeals), Nashik.) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, 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? ===================================================== Mr. B.P. Jain Appellant Vs. Commissioner of Central Excise, Nashik Respondent Appearance: Shri Venkatesh Iyer, Consultant for Appellant Shri D. Nagvenkar, Addl. Commr. (A.R.) for Respondent CORAM: HONBLE SHRI M.V. RAVINDRAN, MEMBER (JUDICIAL) HONBLE SHRI C.J. MATHEW, MEMBER (TECHNICAL) Date of Hearing: 24.02.2016 Date of Decision: 24.02.2016 ORDER NO. Per: M.V. Ravindran:
This appeal is directed against the Order-in-Appeal No. AKP/238/NSK/2010 dated 17.08.2010 passed by the Commissioner of Central Excise & Customs (Appeals), Nashik.
2. Heard both sides and perused the records.
3. The issue involved in this case is regarding the Service Tax liability on the commission received from BSNL for the sale of mobile sim cards during the period from April, 2005 to December, 2008.
4. Both the lower authorities have come to the conclusion the amount received as commission by the appellant needs to be taxed under Business Auxiliary Service. To come to such a conclusion, both the lower authorities have relied upon the franchisee agreement entered by the appellant with BSNL wherein there was a clause for provision of marketing and distribution of its telecom services of BSNL in a specific area. We find that the issue is no more res integra, the Principal Bench of the Tribunal in the case of Commissioner of Central Excise, Allahabad Vs. M/s Capital TV Service Centre 2015-TIOL-2066-CESTAT-DEL in an identical set of facts held as under:-
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)] = 2011-TIOL-71-SC-ST 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.)] = 2009-TIOL-318-HC-KERALA-ST 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.
5. We do not find any reason to deviate from such a view already taken accordingly, following the view, we set aside the impugned order and allow the appeal with consequential relief if any. (Operative portion of the order pronounced in open Court) (C.J. Mathew) (M.V. Ravindran) Member (Technical) Member (Judicial) Sp 5 APPEAL NO. ST/664/10-Mum