RCOM services was engaged in providing telecommunication services. In terms of agreement with RCOM the assessee was providing marketing/distribution services of telecommunication services. They were authorized to collect the sums due from the customers/subscribers in the capacity of agent of RCOM and also authorized to bundle their own services and products along with tariff plans of RCOM.
The assessee was also engaged in business of purchase/sale of SIM cards to various distributors across the country under an agreement with such persons. Adjudicating authority called upon assessee to pay service tax on ground that sale of SIM cards was taxable communication services.
It was noted that assessee had principal to principal agreement with distributors for sale of SIM cards. It was also found that consideration received from sale of SIM cards was retained by assessee themselves and not being remitted to RCOM who was telecom operator which showed that sale of SIM cards was not part of telecommunication service.
Even otherwise, transaction of sale of SIM cards having been accepted to be liable for VAT, same could not be subjected to service tax under category of ‘telecommunication services’
Whether in view of aforesaid, impugned demand of service tax raised by assessee, deserved to be set aside – Held, yes
Citation: [2018] 94 taxmann.com 7 (Mumbai)