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2018-VIL-330-CESTAT-MUM-ST

SERVICE TAX CESTAT Cases

Service Tax - Appellant are engaged in the activity of providing Business Support Service to M/s RCOM under which it is providing billing and collection services to RCOM under an agreement – appellants are also engaged in separate activity of selling of SIM cards and other hardware to the distributors who are selling it onwards to customers - Service tax demand alongwith interest and penalty on the ground that the sale of SIM on behalf of RCOM is taxable under Telecommunication service - ‘Dominant Nature Test’ – HELD – the Appellant is not providing any telecommunication service to any person or subscribers. Hence in such case there is no principal service or dominant service to which the sale of SIM card can be related - The sale of sim card is an independent activity without any relation to any other service hence the same cannot be made liable to service tax. The consideration received from sale of Sim cards is retained by the appellant themselves and not being remitted to M/s RCOM who is telecom operator which shows that the sale of Sim cards is not part of telecommunication service - the Appellant is engaged in two separate activities viz. first rendering marketing services to M/s RCOM or billing services and second sale of Sim cards. These two separate activities not being related to each other does not fall into category of telecommunication service so as to charge service tax from the Appellant on sale of Sim cards on which VAT has been paid - the Appellant has separately sold the Sim cards to the distributors and therefore cannot be considered as rendering of services to subscribers of RCOM. Also, such transactions having been accepted to be liable for VAT cannot be subjected to service tax under the category of Telecommunication Services - the demand and penalties are not sustainable on merits as well as on time bar and accordingly set aside – assessee appeal is allowed

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