Case Law Details
Issue involved in this case 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 or otherwise.
The appellant were selling the sim cards to their franchisee and was paying sales tax to the State and activating the sim cards in the hands of subscribers at a valuable consideration and paying sales tax on the activation charges. They did not discharge the service tax liability on the gross value of the amounts received by them and as provided under Section 67 of the Finance Act, 1994.
We find that the issue is no more res integra and on merits, it is decided against the appellant in the case of Idea Mobile Communication Ltd. vs. Commissioner of Central Excise & Customs, Cochin – 2011-TIOL-71-SC-ST.
This takes us to the correct quantum of the service tax liability to be confirmed against the appellant. The appellant has been claiming the benefit of cum-tax benefit treating the amount realized by them as inclusive of tax. The adjudicating authority did not agree with the contentions. We find that this issue is also no more res integra and is settled in favour of the appellant herein as held by the Tribunal in the case of Commissioner of Central Excise & Customs, Patna vs. Advantage Media Consultant – 2008 (10) STR 449 wherein it has been held as under:
3.Service tax is an indirect tax. As per this system of taxation, tax borne by the consumer of goods/services is collected by the assessee (manufacturer/service provider) and remitted to the Government. When the amount is collected for the provision of services, the total compensation received should be treated as inclusive of service tax due to be paid by the ultimate customer of the services unless service tax is also paid by the customer separately. So considered, when no tax is collected separately, the gross amount has to be adopted to quantify the tax liability treating it as value of taxable service plus service tax payable. We find that this principle has been legislated in the following terms with effect from 18/04/2006 in Section 67(2) of the Finance Act, 1994 as amended:
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