BHARATI MOBINET LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) DEMAND of Duty of Rs. 5,31,527/ - has been confirmed against the appellants as service tax not paid by them during the period April, 1996 to September, 1999. In addition penalty of Rs. 200/ - per day for every day of delay of deposit has been imposed upon them.

(2.) SHRI R. Raghavan, ld. Counsel appearing for the appellants submits that they are Cell phone Operator. The dispute in the present appeal relates to the issue as to whether the value of the SIM Cards provided to their customers is required to be added in valued services being rendered by them for the purpose of Service Tax. In the present appeal, the appellants have paid service tax on the activation charges only. The authorities below have taken a view that since SIM Card is part and parcel of the service being provided by the appellants, the value of the SIM Card is to be added in the value of the Services. Ld. Advocate submits that SIM card is not a part of the service and is a part of the instrument. Service being provided by them is only activation of the SIM Card on which they have already paid Service Tax. He also assailed the impugned order on the point of limitation by submitting that in their invoices they had clearly shown the value of SIM Card and the activation charges separately. However, on being queried by the Bench as to whether the such invoices were produced to the Revenue along with the returns, he submits that there was no provision to annex invoices along with the service tax Return. He further submits that neither the Revenue has asked them to do so. It is the contention of the appellants that there was a bona fide belief on their part that the value of the SIM card is not required to be added in the assessable value of the services being provided by them.

(3.) COUNTERING the argument ld. DR Shri C. Mani appearing for the Revenue submits that SIM cards are not freely available in the market and it is not as if, a customer can buy SIM Card and then approach the appellants for activation of the same. The cards are being provided by the appellants only and as such they are part and parcel of the services being given by them. It is a package which includes SIM card and the activation charges which the appellants are providing to them. As regards, limitation also, he submits that the appellants had only filed the service tax return giving the total figure of the services provided without showing any segregation of the value of the SIM Card or value of the activation charges. In these facts and circumstances it was not possible for the Revenue to find out that it was only activation charges which were reflected by the appellants as service tax value. It is only subsequently when the investigation started, the Revenue came to know that service tax was paid only on activation charges minus value of SIM cards. In these circumstances revenue is justifiable in invoking the longer period of limitation. Ld. DR also places reliance on the earlier Stay Order No. 101/2002, dt. 20 -3 -2002 passed in the appellants' own case directing them to deposit a sum of Rs. 2 lakhs out of the total duty demand of Rs. 9.66 lakhs.