Where VAT has been collected without authority of law and Service tax demand also has been raised for the same period then the VAT Assessing Authority is liable to transfer amount of VAT to Service Tax Department
Idea Cellular Limited (the Petitioner) is engaged in the business of cellular services and as a part of its business activated SIM cards. The Assessing Authority collected VAT on the premise that activation of SIM cards was a sale.
The Hon’ble Supreme Court in the case of Bharat Sanchar Nigam Ltd. Vs. Union of India [(2006) 3 STT 245] held that activation of SIM card was a service and not a sale. Accordingly, the Service Tax Department raised demand of Service tax for the period, VAT was already been paid. Thus, the Petitioner approached the Haryana VAT Department for refund of the amount of VAT.
The Hon’ble High Court of Punjab and Haryana held as follows:
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: firstname.lastname@example.org)