Bharti Hexcom Ltd. v. CCE - Taxpublishers.in

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The Tax Publishers 2018 TaxPub(ST) 1543 (CESTAT-Del) Bharti Hexcom Ltd. v. CCE FINANCE ACT, 1994 --Telecommunication service--Inclusion of value of SIM cards given to distributors free of costTaxability----Where the SIM cards which, the distributor received as free, had been sold on MRP, and since the MRP was inclusive of prices, therefore, demand had to be calculated by taking MRP as cum tax value in terms of section 67(2) of the Finance Act, 1994, thus, demand was sustainable. --Assessee-company was a telecommunication service provider, providing SIM cards to distributors without any consideration. Revenue raised demand of service tax on the value of SIM cards given to the distributors with printed MRP, on the ground that these SIM cards were subsequently sold by the distributors to the subscribers of the telecom services on the payment of printed value. Assessee contended that the explanation attached to rule 5 of the Service Tax (Determination of Value) Rules, 2006, including the gross value of the telecommunication services provided to be the taxable value, was wrongly given retrospective effect by the revenue. *Held:* Rule 5(1) and the explanation thereof were practically disjoint, these were used as independent rules and thus, the explanation did not attain any clarification. It was difficult to consider it retrospectively applicable. Further, the SIM cards which, the distributor received as free, had been sold on MRP, and since the MRP was inclusive of prices, therefore, demand had to be calculated by taking MRP as cum tax value in terms of section 67(2) of the Finance Act, 1994, thus, demand was sustainable. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers 2018 TaxPub(ST) 1543 (CESTAT-Del)

Bharti Hexcom Ltd. v. CCE

FINANCE ACT, 1994

--Telecommunication service--Inclusion of value of SIM cards given to distributors free of costTaxability----Where the SIM cards which, the distributor received as free, had been sold on MRP, and since the MRP was inclusive of prices, therefore, demand had to be calculated by taking MRP as cum tax value in terms of section 67(2) of the Finance Act, 1994, thus, demand was sustainable. --Assessee-company was a telecommunication service provider, providing SIM cards to distributors without any consideration. Revenue raised demand of service tax on the value of SIM cards given to the distributors with printed MRP, on the ground that these SIM cards were subsequently sold by the distributors to the subscribers of the telecom services on the payment of printed value. Assessee contended that the explanation attached to rule 5 of the Service Tax (Determination of Value) Rules, 2006, including the gross value of the telecommunication services provided to be the taxable value, was wrongly given retrospective effect by the revenue. Held: Rule 5(1) and the explanation thereof were practically disjoint, these were used as independent rules and thus, the explanation did not attain any clarification. It was difficult to consider it retrospectively applicable. Further, the SIM cards which, the distributor received as free, had been sold on MRP, and since the MRP was inclusive of prices, therefore, demand had to be calculated by taking MRP as cum tax value in terms of section 67(2) of the Finance Act, 1994, thus, demand was sustainable.