The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) remitted the matter to the Adjudicating authority to decide Applicability of service tax on the difference between the sale of SIM and amount remitted to the telephone company.
The appellant, Virmati Software And Telecommunications Limited has submitted the demand of service tax involved on three counts.
Firstly, the 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.
Secondly, Rs. 14,72,339/- is demanded where there is no joint venture agreement and the appellant was 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.
Lastly, demand of Rs. 47,43,442/- corresponding to appellant’s income relating to the difference between the telephone recharge amount paid by the customers and appellant remitted the amount to BSNL, under Business Auxiliary Service.
The Coram of Judicial Member Ramesh Nair and Technical Member Raju found that from the overall reading of the tripartite agreement, the appellant was one of the parties under the joint venture. It is observed that the Adjudicating Authority has selectively considered the few clauses of the agreement. Further, the appellant claimed that if the overall agreement is read then it is clear that the appellant is a partner in a joint venture and overall activity is on sharing basis therefore, the appellant is not liable to pay service tax.
“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 the 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,” the CESTAT noted.Subscribe Taxscan AdFree to view the Judgment