Buying And Selling Of SIM Cards/ Recharge Coupons Doesn’t Constitute Business Auxiliary Service: CESTAT

The Delhi Bench of the Customs Excise and Service Tax Appellate Tribunal has held that buying and selling of SIM cards and recharge coupons by a distributor under a Distributor Agreement with a Telecom Operator, does not amount to providing business auxiliary services to the said Telecom Operator and thus, the same will not attract service tax. Alleging that the appellant was providing business auxiliary service to M/s Vodaphone Essar Digilink as its franchisee for sale, distribution and marketing of SIM cards and recharge coupons, a show cause notice seeking to impose service tax along with penalty was issued to the appellant. Thus, the department argued that buying and selling of SIM cards by the appellant, can be considered as rendition of business auxiliary service to its principal, M/s Vodafone Essar Digilink. On this ground alone the entire show cause notice needs to be set aside.” While reckoning that the CESTAT has consistently held that buying and selling of SIM cards and recharge coupons does not amount to providing business auxiliary service to the principal, the Tribunal referred to the decision of CESTAT in M/s Devangi Communications & Ors.