CELLEBRUM TECHNOLOGIES LTD. AND ORS. Vs. COMMISSIONER OF CENTRAL EXCISE
LAWS(CE)-2015-4-42
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on April 30,2015

Cellebrum Technologies Ltd. And Ors. Appellant
VERSUS
COMMISSIONER OF CENTRAL EXCISE Respondents


Referred Judgements :-

NIZAM SUGAR FACTORY VS. CCE [REFERRED TO]
AMIT AGROS VS. CCE [REFERRED TO]
GUJARAT CHEM. PORT TERMINAL CO. LTD. VS. CCE AND C [REFERRED TO]
W O HOLLSWORTH VS. STATE OF UTTAR PRADESH [REFERRED TO]
COMMISSIONER OF CENTRAL EXCISE DELHI VS. MARUTI UDHYOG LIMITED [REFERRED TO]
INTEROCEAN SHIPPING CO. VS. COMMISSIONER OF SERVICE TAX [REFERRED TO]


JUDGEMENT

R.K.SINGH, MEMBER (T) - (1.)THE appellants have filed these Appeals against confirmation of demand of service tax along with interest and penalties including the mandatory penalty under Section 78 of the Finance Act, 1994. The respective demands involved in these appeals are summarised under: -
(2.)The facts briefly stated are as under: -
The appellants were providing Short Message Peer to Peer (SMPP) service to various clients but were not paying service tax thereon. The SMPP service inter alia involves sending SMS to customers of their clients on a bulk basis. The said service was provided to a large number of clients and described in their invoices as "charges for short messaging enabling software on per SMS basis and peer to peer and person to person basis". As per the product note submitted by the appellants, the nature of SMPP service provided was as under: -

(i) Transmit message from an ESME to single or multiple destinations via the Short Message Service Centre (SMSC),

(ii) An External Short Message Entity (ESME) may receive messages via the SMSC from other ESME's (e.g. mobile stations)

(iii) Query the status of a short message stored on the SMSC.

(iv) Cancel or replace a short message stored on the SMSC.

(v) Send a registered short message (for which a 'delivery receipt' will be returned by the SMSC to the message originator).

(vi) Schedule the message delivery date and time.

(vii) Select the message made i.e. datagram or store and forward.

(viii) Set the delivery priority of the short message.

(ix) Define the data coding type of the short message.

(x) Set the short message validity period.

(xi) Associate a service type with each message e.g. voice mail notification.

The adjudicating authority held that service being provided clearly fell under the category of provision of service on behalf of clients and therefore was liable to tax under Business Auxiliary Service (BAS) defined under Section 65(19) of the Finance Act, 1994. The adjudicating authority has also held that the appellants had suppressed the facts and therefore invoking the extended period also imposed penalty along with mandatory penalty under Section 78 of the Act.

(3.)THE appellants have contended that the appellants are engaged in "Short Message Peer to Peer Services" (SMPP services) to their clients. They were only acting as carrier of messages like a courier agency sending parcels. The appellants allow their clients to access their gateway/SMPP Server through which their clients submit their own data to form short messages. The application software used by the appellants processes such messages so that it can hand over the messages to the cellular phone operators, which would carry the messages and deliver the same to the handsets as desired by their (i.e. appellants') clients. The appellants engage the cellular operators on their own account for bulk messaging. The appellants are registered with the Service Tax Department under the taxable category of "Business Auxiliary Service" and paying service tax on certain services provided by them falling under the said category. But for providing SMPP service to their clients they had not paid any service tax on the amount received therefor as in their opinion SMPP service is not classifiable under BAS. Revenue demanded service tax on the said service under the sub -category "provision of service on behalf of the client in sub -clause (vi) of the clause (19) of Section 65 of the Finance Act, 1994, which defines the taxable category BAS.
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