The appeal ruled that purchasing and selling sim cards does not entail providing 'Business Auxiliary Service' under applicable tax laws due to prior tax settlement by the service provider.

1. The present appeal is directed against the Order - in - Original No. 19 / Commr. / LKO / 2010 dated 03/07/2010 passed by the learned Commissioner of Central Excise & Service Tax, Lucknow holding that service tax is payable on the profit margin earned by the appellant during the course of trading of sim cards and recharge coupon of Bharat Sanchar Nigam Ltd. (BSNL) thereby upholding the demand of service tax amounting to Rs. 1,21,71,306/- along with penalty under S.78, S.77(1)(a) and (c) of the Finance Act, 1994 . Aggrieved by the said order, the appellant is before us by way of present appeal. Brief facts of the case are that M/s. Chotey Lal Radhey Shyam was appointed as a franchisee for Lucknow by BSNL for the sale of sim cards and recharge coupons of BSNL, who in turn, sells the same through network of retailers, which amounts to trading activity and the appellant has not provided any service to BSNL and the alleged agreement between him and the BSNL is on principal to principal basis. This relationship between the two was conveyed to the Commissioner by producing a letter in writing by Chief General Manager of BSNL. It is further alleged that BSNL has paid the service tax on the face value of the sim cards and recharge coupons including the profit margins of the franchisee, i.e., the appellant.

2. Learned Counsel for the appellant submitted that the respondent - Revenue failed to bring in any evidence on record showing that the appellant is generating demand, rectifying complaints, providing after - sale service, promoting BSNL brand, performing other promotional events, etc. Whereas, the appellant has produced on record the letter written by the Chief General Manager of BSNL to Commissioner of Central Excise and Service Tax, clarifying that the relationship between BSNL and its franchisee. Chief General Manager had also informed the Commissioner that BSNL does not pay any commission to its franchisee and only offer discount to their franchisee at the time of sale of recharge vouchers. He further submitted that the appellant is not carrying on the activity of 'Business Auxiliary Service' and having only purchased sim cards and recharge coupons and sell the same and earn profit in the process and this activity of purchase and sale comes within the purview of sale of goods and sales tax is attracted. In support of his submission he rely upon the judgments of the Tribunal in the case of G.R. Movers v. CCE MANU / CE / 0648/2012 : [2013] 31 taxmann.com 139 : 39 STT 264 (Tri. - Delhi) wherein the hon'ble Tribunal has held that service tax is not payable on the commission paid by BSNL out of the value of services for which BSNL has already paid service tax. The Tribunal in this case relied upon the following judgments:
(i) Chetan Traders v. CCE MANU / CE / 0551/2008 : [2008] 17 STT 318 (New Delhi - CESTAT)
(ii) Hindustan Associated Traders v. CCE MANU / CB / 8198/2007 : [2007] 11 STT 287 (Bang.)
(iii) South East Corpn. v. CCE & ST MANU / CB / 8188/2007 : [2009] 22 STT 446 (Bang. - CESTAT)
(iv) Karakattu Communications v. CCE MANU / CB / 8217/2007 : [2009] 21 STT 384 (Bang. - CESTAT)

3. Revenue filed appeal against the decision of the Tribunal in the case of G.R. Movers (supra) before the Allahabad High Court Bench at Lucknow and the same was dismissed. The Hon'ble High Court, while dismissing the appeal has observed as under:
"From the record, it appears that the controversy involved in the instant appeal has already been adjudicated by this Court in Central Excise Appeal No. 21 of 2013 decided on 25/07/2013. The operative portion, on reproduction, reads as:
'After hearing learned Counsel for the appellant, we are of the opinion that no substantial question arises in the