Buying and Selling of SIM Cards and Recharge Coupons does not amount to providing Business Auxiliary Service: CESTAT [Read Order]

Buying and Selling - Buying - Selling - SIM Cards - Recharge Coupons - Business Auxiliary Service - CESTAT - taxscan

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), ruled that buying and selling of SIM cards and recharge coupons does not amount to providing business auxiliary service.

The appellant, M/s J.K. Enterprisesbuys and sells SIM cards, recharge coupons etc. for mobile phones under a super distributor agreement with M/s Vodaphone Essar Digilink Ltd. A show cause noticecovering the period April 2008 to March 2012 was issued to the appellant alleging that it was providing business auxiliary service to M/s Vodaphone Essar Digilink Ltd as their franchisee for sale/distribution and marketing of the SIM cards and recharge coupons.

Accordingly, service tax was demanded and penalties were proposed to be imposed. The show cause notice culminated into the issue of the order.

The Counsel for the appellant submitted that the sale and purchase of SIM cards is trade and not a service and, therefore, it does not amount to providing business auxiliary service to M/s Vodafone.

The Authorized Representative for the Revenue supports the order and that SIM cards are not goods but are a form of a service as held by the Supreme Court in Idea Mobile Communication Ltd. Therefore, the adjudicating authority has correctly held that the appellant was providing business auxiliary service to its principal M/s Vodafone.

The case of the Revenue is that since the Supreme Court has held in the case of Idea Cellular, that SIM card is not goods and its value is includible to the value of the service provided by the telecom operator, buying and selling of SIM cards can be considered as rendering business auxiliary service to the principal.

The Bench comprising Justice Dilip Gupta, President and P.V. Subba Rao, Member (Technical) observed that “We find that this Tribunal has consistently held that buying and selling of SIM cards and recharge coupons does not amount to providing business auxiliary service to the principal in several cases as in the case of M/s Devangi Communications & Others.”

Subscribe Taxscan Premium to view the Judgment

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

taxscan-loader