CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

NEW DELHI

PRINCIPAL BENCH – COURT NO. I

Service Tax Appeal No. 53553 of 2015

(Arising out of Order-in-Original No. ALW-EXCUS-OIO-COM-10-1516 dated

22.07.2015 passed by the Principal Commissioner, Central Excise, Alwar)

M/s J.K. Enterprises Appellant

Choburja Bazar,

Bharatpur (Rajasthan)

VERSUS

Principal Commissioner, Central Excise Respondent

Commissionerate, Alwar

Appearance

Ms. Surabhi Sinha, Advocate – for the Appellant.

Shri Rajeev Kapoor, Authorized Representative – for the

Respondent.

CORAM : HON’BLE MR JUSTICE DILIP GUPTA, PRESIDENT

HON’BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL)

DATE OF HEARING : 22/12/2022

DATE OF DECISION : 19/01/2023

Final Order No. 50049/2023

P.V. Subba Rao

M/s J.K. Enterprises¹ filed this appeal to assail the order in

original dated 22.07.2015 passed by the Principal Commissioner of

Central Excise, Alwar whereby he confirmed the demand of Rs.

62,20,384/- as service tax under Section 73 and imposed and an

equal amount of penalty under Section 78 and further imposed a

penalty under Section 77.

1

appellant

2

ST/53553/2015

2. The appellant buys and sells SIM cards, recharge coupons

etc. for mobile phones under a super distributor agreement with

M/s Vodaphone Essar Digilink Ltd. A show cause notice dated

11.10.2013 covering the period April 2008 to March 2012 was

issued to the appellant alleging that it was providing business

auxiliary service to M/s Vodaphone Essar Digilink Ltd. as their

franchisee for sale/distribution and marketing of the SIM cards and

recharge coupons. Accordingly, service tax was demanded and

penalties were proposed to be imposed. The show cause notice

culminated into the issue of the impugned order.

3. Learned counsel for the appellant made the following

submissions:

(i)

The entire demand is hit by limitation as it has been

issued after a period of one year and extended period

of limitation could not have been invoked in this case

because on the same issue a show cause notice dated

26.04.2011 was issued to the appellant by the

Department. The second show cause notice cannot be

issued invoking extended period of limitation. Reliance

was placed on Nizam Sugar Factory Vs. Collector of

Central Excise²;

(ii)

Invocation of extended period of limitation is also not

sustainable because there were divergent views on the

issue at that time and the appellant was under the bona

fide belief that it was not liable to pay service tax on

the sale or purchase of the SIM cards;

2

2006 (197) ELT 465 (SC)

3

ST/53553/2015

(iii)

The sale and purchase of SIM cards is trade and not a

service and, therefore, it does not amount to providing

business auxiliary service to M/s Vodafone as has been

held in the following cases:

(i)

Virmati Software And Telecommunications Ltd.

Vs. Commissioner of Central Excise & Service

Tax, Ahmedabad;³

(ii)

Devangi Communication & Other Vs. CST & CE,

Bangalore-ii and CCE Vs. Shri V.M. Nayak Benne⁴

(iii)

M/s Deccan Associated Vs. CCE & ST, Calicut⁵;

(iv)

M/s Jalaram Agency Vs. CST-Mum-II⁶;

(v)

M/s ASS Manoharan Vs. CEX, Tiruvelveli & Ors.⁷;

(vi)

CCE, Lucknow Vs. M/s Chotey Lal Radhey Sham⁸

(iv)

Even if the demand is upheld, penalties cannot be

imposed and the benefit of Section 80 of the Finance

Act 1994 may be extended to set aside the penalties.

4. Learned authorized representative for the Revenue supports

the impugned order. He submits that SIM cards are not goods but

are a form of a service as held by the Supreme Court in Idea

Mobile Communication Ltd.⁹. Therefore, the adjudicating

authority has correctly held that the appellant was providing

business auxiliary service to its principal M/s Vodafone.

5. We have gone through the records of the case and

considered the submissions on both sides.

3

2021 (52)