Case Law Details
Bharat Sanchar Nigam Ltd. Vs CCE, Bhopal (CESTAT Delhi)
The sales tax authorities have themselves conceded the position before the High Court that no assessment of sales tax would be made on the sale value of the SIM Card supplied by the appellant to their customers irrespective of the fact whether they have filed returns and remitted tax or not. It also cannot be disputed that even if sales tax is wrongly remitted and paid that would not absolve them from the responsibility of payment of service tax, if otherwise there is a liability to pay the same. If the article is not susceptible to tax under the Sales Tax Act, the amount of tax paid by the assessee could be refunded as the case may be or, the assessee has to follow the law as may be applicable. But we cannot accept a position in law that even if tax is wrongly remitted that would absolve the parties from paying the service tax if the same is otherwise found payable and a liability accrues on the assessee. The charges paid by the subscribers for procuring a SIM Card are generally processing charges for activating the cellular phone and consequently the same would necessarily be included in the value of the SIM Card.
Appellant itself subsequently has been paying service tax for the entire collection as processing charges for activating cellular phone and paying the service tax on the activation. The appellant also accepts the position that activation is a taxable service. The position in law is therefore clear that the amount received by the cellular telephone company from its subscribers towards SIM Card will form part of the taxable value for levy of service tax, for the SIM Cards are never sold as goods independent from services provided. They are considered part and parcel of the services provided and the dominant position of the transaction is to provide services and not to sell the material i.e. SIM Cards which on its own but without the service would hardly have any value at all. Thus, it is established from the records and facts of this case that the value of SIM cards forms part of the activation charges as no activation is possible without a valid functioning of SIM card and the value of the taxable service is calculated on the gross total amount received by the operator from the subscribers.
FULL TEXT OF THE CESTAT JUDGMENT
The present appeal arises out of confirmation of demand of Rs.4,88,898/- against the appellant on the value received by them on account of ‘sale of post paid SIM’, ‘registration of post paid SIM’, ‘access registration of pre-paid SIM’ and sale of Anant plan (Life time prepaid SIM)’, which has been held as includable in the taxable value for the purpose of levy of Service Tax by the lower adjudicating authority and same has been confirmed by the learned Commissioner (Appeals) in his order dated 09.05.2014. The appellants are before us against this order of the Commissioner (Appeals).
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