By TIOL News Service

MUMBAI, MAR 08, 2019: ON the basis of EA-2000 audit, the assessee was called upon to pay service tax alongwith interest and penalty on the ground that the sale of SIM cards is a taxable service provided to the customer as the same had been provided on behalf of M/s Reliance Communication Ltd. (RCOM).

The demand was confirmed by the CST, Mumbai with interest and penalty and in appeal, it was submitted by the Appellant that they are not telecom service providers but are merely engaged in supply of SIM cards; that sale of SIM cards to distributor is an independent transaction and separate from marketing and distribution services to RCOM, as sale of SIM cards is sale of goods; that the State Government has levied VAT on sale of SIM cards; that distribution of SIM cards is a separate discernible sale transaction liable to sales tax/VAT.

The AR submitted that in view of the apex Court judgment in case of IDEA MOBILE COMMUNICATION LTD - 2011-TIOL-71-SC-ST the issue is squarely settled that the sale of SIM cards is liable for Service Tax.

The Bench, while allowing the appeal on merits, distinguished the case law cited by noting that in the said case M/s Idea was themselves the telecom service provider who issued SIM cards to their customer; that the SIM cards were made liable to service tax being part of telecommunication services and in the present case as per the facts narrated, the Appellant themselves are not any telecommunication service provider and even the SIM cards have been assessed to VAT which leads to the conclusion that no service tax can be levied on such sale of SIM cards. It was also held that the demand was hit by limitation.

We reported this order as 2018-TIOL-1383-CESTAT-MUM.

Revenue has filed an application for rectification of mistake in the said order.

It is contended that the submissions made by the Authorised Representative during the course of hearing were not taken into consideration in the said order passed by the Tribunal.

The Bench observed that the appeal was heard on 18.01.2018 in presence of both sides and the order was reserved. Thereafter, both sides were directed to file written submissions within 2 weeks; that the Revenue had filed the written note of submissions along with other documents on 01.02.2018 in the Registry of Tribunal butthe said written submission was not placed in the file.

Therefore, the Bench held –

"…, it is evident that without considering the submissions made by Revenue, the Tribunal had passed the order dated 13.04.2018, which is an apparent mistake on the face of the record. Accordingly, the miscellaneous application filed by Revenue merits consideration for recalling the order dated 13.04.2018 and for hearing of appeals afresh."

In fine, the miscellaneous application filed by Revenue was allowed and Registry was directed to list the appeal for hearing afresh on 25.03.2019.

In passing : On our part, we will keep you posted.

(See 2019-TIOL-722-CESTAT-MUM)