The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that service tax cannot be levied on recharge coupons received from DTH operators.
The appellants are engaged in activities of rendering services to DTH broadcasting service providers such as, Sun Direct Private Ltd. Appellant installs the DTH instruments including cards therein and activates the same for which they receive service charges and pay applicable service tax on such charges. In addition, they also sell recharge coupon vouchers received from DTH operators for which they were paid a certain amount as commission. The recharge coupon vouchers carry a maximum retail price inclusive of all taxes and on such price the DTH operator was already discharging service tax.
The department demanded tax from the appellants by holding that the commission received by the appellants from the DTH operators towards the sale of recharge coupons is taxable under the head “Business Auxiliary Service”.
On the second appeal, the Tribunal observed that once the service tax has been paid on the M.R.P no service tax needs to be paid on the commission received by the distributor because it is a part of the M.R.P.
“If tax is so levied, it amounts to double taxation. This view held by the Tribunal has been upheld by the Hon‟ble High Court of Allahabad and subsequently followed by the Hon’ble High Court of Madras. The present case, though it pertains to DTH operators, stands on the same footing and the logic, in our opinion, should be applied to these cases as well. It is true that the appellant is providing services to the DTH operators and is getting a commission for such services. If the appellant had paid service tax on such commission, the main DTH operator could have availed cenvat credit of the same thereby proportionately reducing the amount paid in cash by the DTH operator. Therefore, the entire exercise is also revenue-neutral. In view of the above, we find that the issue is no longer res integra. On the SIM cards, recharge coupons etc., where the service tax has been paid on the M.R.P by the main operator the commission agent/distributor need not pay service tax on the commission received by him because commission also forms part of the M.R.P. on which service tax has already been discharged,” the Tribunal said.Subscribe Taxscan AdFree to view the Judgment