BHARATI SAPRU,J. - (1.) Heard Sri Piyush Agrawal, Learned Counsel for the appellant and Sri Subham Agrawal assisted by Ms. Sanyukta Singh, Learned Counsel for the respondent assessee.
(2.) This is department's appeal under Section 35G of the Central Excise Act, 1944 against the judgment and order dated 3-7-2017 passed by the Customs, Excise and Service Tax Appellate Tribunal, Allahabad Bench, Allahabad. The questions of law sought to be answered are as under : "(a) Whether the Hon'ble CESTAT has erred in not confirming the demand of Service Tax along with interest and imposition of penalties for the period in question when the "Business Auxiliary Service" was clearly defined under Section 65(19) of the Finance Act, 1994 and included services rendered by the respondent? (b) Whether the exemption from payment of Service Tax was granted by a specific Notification No. 25/2012-S.T., dated 20-6-2012, it was effective from 1-7-2012 and prior to that, whether the Hon'ble CESTAT's order was justified in dropping the demand of Service Tax? (c) Whether the Hon'ble Apex Court in the case of Idea Mobile Communication Limited v. CCE, Cochin reported in 2011 (23) S.T.R. 433 (S.C.), has held that the value of SIM cards forms part of the activation charges as no activation is possible without a valid functioning of SIM card and the value of the taxable service is calculated on the gross amount received by the operator from the subscribers and the present transactions to BSNL and payment by BSNL were different, whether the Hon'ble CESTAT was justified in dropping the demand of Service Tax? (d) Whether the Hon'ble CESTAT erred in treating it as double taxation when services are distinct? Service Tax is paid on full value of SIM card by BSNL under the "Telecommunication Service" and under "Business Auxiliary Service". In the instant case, Service Tax has been demanded from the respondent under the category of "Business Auxiliary Service" on the communication received from BSNL, which is entirely different from "Telecommunication Service"? (e) Whether the Hon'ble CESTAT has erred in not taking into account of its own case passed vide Final Order No. ST/A/684-687/2012-CU(DB), dated 6-11-2012 in respect of M/s. Martand Food and Dehydrates Pvt. Ltd., Unnao, wherein at para 18 it was observed that "BSNL is paying Service Tax for value of telecommunication service being provided by them to the customer. Revenue is demanding tax on the service provided by distributor to BSNL which is in the nature of marketing of the services of BSNL to its customers and tax is demanded under the head of "Business Auxiliary Service". Under the scheme of levy and collection of Service tax there is a liability on the distributors to pay Service tax to the exchequer on the service rendered by them to BSNL". Thus the CESTAT has itself recognized the existence of two different services being provided, (a) Telecommunication service provided by BSNL to subscribers of BSNL and (b) service provided by the distributor to BSNL under the category of "Business Auxiliary Service".
(3.) In view of the admitted fact that the appellants are franchisee/distributors appointed by the BSNL and as per documents on record during the material period they were engaged in purchase of SIM cards from M/s. BSNL and their respective sale to the buyers. The records show that they have not provided any service in relation to sale promotion of goods belonging to M/s. BSNL. As such the activities carried out by them cannot be treated as falling within the purview of 'Business Auxiliary Service'. Moreover M/s. BSNL have already discharged the burden of Service Tax on the gross amount of SIM cards and demand of Service Tax on the same amount from the appellants will only lead to double taxation which is not permissible under the law. Hence the demand of Service Tax as ordered vide impugned order-in-original is not sustainable. Further when the demand is not sustainable, penalties imposed are also not maintainable.;