MAGNUM VISION Vs. COMMISSIONER OF SERVICE TAX, BANGALORE

JUDGEMENT

(1.) HEARD both sides extensively on the stay petition.

(2.) THE applicant has entered into agreement referred to as franchisee agreement with BSNL in respect of cell phone services rendered by BSNL. They were receiving SIM cards/recharge coupons with specified face value; while delivering such SIM cards/recharge coupons, BSNL has undisputedly paid Service Tax on the face value. The applicant has contacted the prospective subscribers or subscribers had contacted the applicant and the applicant has given the SIM cards/purchase coupons and the connections were activated by BSNL. The dispute relates to payment of Service Tax in respect of amount retained by the applicant. This is being described as discount/commission. In respect of the above issue, a Service Tax demand of Rs. 94,99,686/ - relating to the period 1 -4 -2004 to 31 -3 -2009 along with interest stands confirmed and penalties imposed under various sections.

(3.) 1 Learned advocate contests the demand and submits that BSNL has paid the Service Tax on the entire amount and they are merely an intermediary in the service rendered by BSNL to the subscribers. He relies on the stay orders passed by the Tribunal e.g. the order in the case of Devangi Communications v. Commissioner, Mysore reported in 2010 (19) S.T.R. 779 on identical issue involving BSNL. 3.2 Referring to paragraph 9 of the Circular F. No. 334/3/2011 -TRU, dated 28 -2 -2011, he submits that the Valuation Rules for Service Tax stands amended to treat the gross amount paid by the subscribers to be the value for taxable purposes in respect of telecommunication service. Therefore he submits that there is no scope for demanding Service Tax again on the portion of the value which stands already taxed at the hands of BSNL. 3.3 He also submits that for an earlier period, the department had raised the same issue and proceedings were dropped and therefore invoking the extended period of limitation in the present case by issuing the show -cause notice dated 13 -10 -2009 is not justified.