Case Law Details
Virmati Software And Telecommunications Limited Vs Commissioner of Central Excise & ST, Ahmedabad (CESTAT Ahmedabad)
As regards the demand of Rs. 47,43,442/- which represent service tax on difference between the telephone recharge amount received from customers and amount out of the same paid to telecom companies. In this fact, it appears that difference amount is nothing but commission against sale of SIM Cards or recharge of SIM Cards. On this issue various judgments have been passed and some judgments are cited below:-
(a) CCE, Meerut vs. Moradabad Gas Service – 2013 (31) STR 308 (Tri. Del.)
(b) GR Movers vs. CCE, Lucknow – 2013 (30) STR 634 (Tri. Del.)
(c) Daya Shankar Kailash Chand vs. CCE Lucknow – 2013 (30) STR 428 (Tri. Del.)
(d) Omar Agecies (Hutch) vs. Commissioner of C. Ex., Allahabad 2015 (40) S.T.R. 1135 (Tri.- Del.)
(e) Reliance Communication Infrastructure Ltd vs C.S.T., Mumbai-II 2019 (22) G.S.T.L. 223 (Tri- Mumbai)
In view of the above judgments, it prima-facie appears that difference amount between the sale of SIM card / recharge of SIM card and the amount remitted to the telephone company is nothing but only commission on which suffered service tax in the hands of principal. In view of our above observation, the entire matter needs reconsideration. Our views being prima-facie should not influence the findings to be given afresh by the Adjudicating Authority.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
In the present case the demand of service tax involved is on three counts as follows:-
(i) Demand of Rs. 31,51,929/- for the period upto 01.12.2009, is demand on the sharing of Revenue received by the appellant under joint venture agreement with E.Mitra Societies, under Maintenance and Repair Services.
(ii) Rs. 14,72,339/- is demand where there is no joint venture agreement and the appellant were liable to pay service tax but the service tax was deducted by E.Mitra societies and the same was claimed to have been deposited by the Society.
(iii) Demand of Rs. 47,43,442/- corresponding to appellant’s income relating to difference between the telephone recharge amount paid by the customers and appellant remitted the amount to BSNL, under Business Auxiliary Service.
2. We have heard both the sides and perused the record. As regard the demand of Rs. 31,51,929/-, we prima-facie find that from the overall reading of tripartite agreement, the appellant was the one of the party under joint venture. It is observed that Adjudicating Authority has selectively considered the few clauses of the agreement. Further, the appellant claimed that if overall agreement is read then it is clear that the appellant is partner in joint venture and overall activity is on sharing basis therefore, appellant is not liable to pay service tax.
We find that since the learned Commissioner has not considered the entire agreement and not discussed on each and every clause particularly the clauses pointed out by the appellant, the conclusion arrived at is not proper and legal.
3. As regards the demand of Rs. 14,72,339/-, it is the submission of the appellant that in this case, though the appellant was liable to pay service tax but there was no joint venture arrangement for the period 01.12.2009 to 31.03.2011. They have submitted that even in this case, the service tax was deducted by E.Mitra and the same was deposited by the society. If it is so, after verification, if it is established that the payment was deducted from the amount paid to the appellant and the same was deposited in the Government exchequer, then prima facie service tax once again cannot be demanded from the appellant.
In both the above demands, the appellant also raised the issue of jurisdiction. It is appellant’s submission that since they have raised the bills from Rajasthan and provided service in Rajasthan only, therefore the jurisdiction in that State apply and not Ahmedabad jurisdiction. In this regard, after going through the relevant rules, particularly Rule-4 of Service Tax Rules, 1994, we find that Adjudicating Authority has also not considered the entire provision and it was interpreted in piecemeal and came to the conclusion that appellant falls under Ahmedabad jurisdiction. This aspect also needs to be examined very carefully.
4. As regards the demand of Rs. 47,43,442/- which represent service tax on difference between the telephone recharge amount received from customers and amount out of the same paid to telecom companies. In this fact, it appears that difference amount is nothing but commission against sale of SIM Cards or recharge of SIM Cards. On this issue various judgments have been passed and some judgments are cited below:-
(a) CCE, Meerut vs. Moradabad Gas Service – 2013 (31) STR 308 (Tri. Del.)
(b) GR Movers vs. CCE, Lucknow – 2013 (30) STR 634 (Tri. Del.)
(c) Daya Shankar Kailash Chand vs. CCE Lucknow – 2013 (30) STR 428 (Tri. Del.)
(d) Omar Agecies (Hutch) vs. Commissioner of C. Ex., Allahabad 2015 (40) S.T.R. 1135 (Tri.- Del.)
(e) Reliance Communication Infrastructure Ltd vs C.S.T., Mumbai-II 2019 (22) G.S.T.L. 223 (Tri- Mumbai)
5. In view of the above judgments, it prima-facie appears that difference amount between the sale of SIM card / recharge of SIM card and the amount remitted to the telephone company is nothing but only commission on which suffered service tax in the hands of principal. In view of our above observation, the entire matter needs reconsideration. Our views being prima-facie should not influence the findings to be given afresh by the Adjudicating Authority.
6. Accordingly, while keeping all the issues open, we set-aside the impugned order and allow the appeal by way of remand to the Adjudicating Authority.
(Pronounced in the open court on 19.08.2021)
