Messrs Hari Om Marketing Vs C.C.E. & S.T (CESTAT Ahmedabad)
Introduction: In a landmark ruling by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Ahmedabad, it was established that the commission received by the appellant (Messrs Hari Om Marketing) from their principal client BSNL, in relation to the sale and purchase of SIM cards, would not be subjected to separate service tax under the category of ‘business auxiliary service’. This commission, when included in the gross sale price of SIM cards sold to customers, doesn’t invite a separate tax, as it has already been taxed once.
Analysis: This case revolved around the issue of whether service tax could be charged twice on the same revenue, once from BSNL, and then from the vendor selling the SIM cards. According to the verdict, charging service tax on the commission received by the appellant would result in double taxation, which isn’t permissible. The ruling was grounded in the appellant’s relationship with BSNL as a principal, rather than an agent. This principle has been established in several other judgments cited by the appellant, including the case of Chotey Lala Radhey Shyam Vs. CCE & ST, Lucknow. This verdict aligns with past rulings, stating that a seller engaged in the trading activity of SIM cards and recharge coupons does not render any “business auxiliary service.”
Conclusion: The CESTAT Ahmedabad’s decision reaffirms the legal position against double taxation, ensuring that service tax isn’t levied separately on the commission received by the appellant included in the gross sale price of SIM cards. This is a significant ruling for businesses involved in similar trading activities, providing clarity on the nature of service tax application and avoiding potential legal disputes.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The issue involved in the present case is that whether commission received by the appellant from their principal client M/s. BSNL in connection with sale and purchase of SIM card is liable to service tax under the head of business auxiliary service.
2. Shri Amal Dave, Learned Counsel appearing on behalf of the appellant submits that the issue is settled in favour of the assessee in various judgments cited below:-
