'Trading Activity Not Taxable as Business Auxiliary Service': CESTAT Quashes Service Tax Demand [Read Order]
The Tribunal observed that the assessee's role was purely a trading activity, conducted on a principal-to-principal basis with Vodafone, and did not involve promoting or marketing services as an agent
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The New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) quashed a service tax demand imposed on the assessee, Agarwal Traders, holding that their activities constituted a trading relationship with Vodafone Digilink Ltd and not a taxable "Business Auxiliary Service". In this case, the assessee appealed against the order passed by the Commissioner...
The New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) quashed a service tax demand imposed on the assessee, Agarwal Traders, holding that their activities constituted a trading relationship with Vodafone Digilink Ltd and not a taxable "Business Auxiliary Service".
In this case, the assessee appealed against the order passed by the Commissioner (Appeals), CGST and Central Excise, which had upheld a demand for service tax on commissions earned by the appellant for selling Vodafone SIM cards and recharge vouchers during April to June 2012.
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The issue in this case was whether Agarwal Traders, acting as a dealer for Vodafone Digilink Ltd., was liable to pay service tax on discounts or commissions received for marketing and distributing Vodafone products.
 The Revenue’s counsel argued that these activities fell under "Business Auxiliary Service", as defined under Section 65 of the Finance Act, 1994, making the commissions taxable.
The assessee’s counsel relied on the decision of the CESTAT’s division bench in the case of Chotey Lal Radhey Shyam vs. Commissioner of Central Excise and Service Tax, Lucknow, 1 2015(11)TMI 979-CESTAT, in which the appeal was allowed and the facts of the above case are similar to those of the assesse’s.
Read more: CESTAT Upholds Service Tax Demand of Rs. 3.44 Crore on Promotional Marketing Activities
The Tribunal observed that the assessee’s role was purely a trading activity, conducted on a principal-to-principal basis with Vodafone, and did not involve promoting or marketing services as an agent. It noted that Vodafone had already paid service tax on the SIM cards and recharge coupons, making the additional demand on the appellant amount to double taxation.
The bench held that the Commissioner (Appeals) was not justified in confirming the demand of service tax on the appellant.
The CESTAT, comprising Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member), set aside the impugned order and allowed the assessee’s appeal.
To Read the full text of the Order CLICK HERE
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