Custom, Excise & Service Tax TribunalM/S Vodafone South Ltd vs Commissioner Of Service Tax, Bangalore on 13 August, 2014CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
BANGALORE

FINAL ORDER No. 21330 / 2014    
Application(s) Involved:

ST/Stay/22148/2014    in    ST/21949/2014-DB

Appeal(s) Involved:

ST/21949/2014-DB 
[Arising out of Order-in-Original No. 17/2013 dated 02/01/2014 passed by Commissioner of Central Excise and Service Tax, BANGALORE-I]

M/s Vodafone South Ltd
11/1, 12/1, Maruthi Infotech Centre, Amarjyothi Layout, Domlur
BANGALORE  560071	Appellant(s)
	
	Versus	
Commissioner of Service Tax,  Bangalore
1ST TO 5TH FLOOR,
TTMC BUILDING,
Above BMTC BUS STAND,DOMLUR
BANGALORE - 560071	Respondent(s)Appearance:Mr. G. Shivadass, Advocate
WORLD TRADE CENTRE NO.404-406,
4TH FLOOR, SOUTH WING BRIGADE GATEWAY CAMPUS NO.26/1,
DR. RAJKUMAR ROAD,
BANGALORE - 560 055	For the Appellant

Mr. R. Gurunathan, A.R. 	For the Respondent

CORAM :HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER
HON'BLE SHRI S.K. MOHANTY, JUDICIAL MEMBER
________________________________________
Date of Hearing: 13/08/2014	Date of Decision: 13/08/2014

Per B.S.V. MURTHY 	
        Appellants are engaged in providing cellular phone service  falling under the category of Telecommunication Service. To carryout their business activity, the appellant has engaged distributors to sell SIM cards to subscribers. The distributors of the SIM cards have paid service tax in respect of the services provided by them.   Taking a view that Cenvat credit is not admissible, service tax of                    Rs. 67,27,074/- availed as Cenvat credit has been demanded with interest and penalty has been imposed for the period from April 2011 to March 2012 in the impugned order. Even only stay application is listed for consideration, after hearing both the sides that the issue falls within a narrow compass and final decision can be taken at this stage itself.  Therefore we waive the requirement of pre-deposit and take up the appeal itself for final decision.2.     The case of the department is that the appellant is not entitled to take Cenvat credit since the services provided by the distributors have  no nexus with output service  namely, telecom  service provided by the appellant.  The Commissioner has observed that input service did not have a great impact on the provision of taxable services namely, telecom service.   He also relied upon the decision of Honble High Court of Gujarat in the case ofCommissioner of C. Ex., Ahmedabad-II vs. Cadila Healthcare Ltd.[2013 (30) S.T.R. 3 (Guj.)] wherein it was held that  credit of service tax paid by a commission agent for sale is not available to the manufacturer.3.     Learned counsel submitted that credit has been denied only on the ground of nexus with input service.   He placed reliance on the decision in the case ofIdea Mobile Communication Ltd. vs. C.C.E, Cochin[2011 (23) S.T.R. 433 (S.C.)] wherein the Honble Supreme Court observed that SIM cards are considered part and parcel of service provided;  SIM cards are never sold as goods independent from services provided; and the dominant position of the transaction is to provide services.4.     We have considered the submissions made by both sides.   We are unable to agree with the findings of the Commissioner that there is no nexus between the service provided by distributors of SIM cards to the appellant.  As per the decision relied upon by learned counsel, Honble Supreme Court also took the view that SIM cards are considered part of services.  Moreover, it is a fact that only when SIM card is available, the service provider can provide cellular phone service and receiver can avail the same.   What is required to be considered in this case is whether the service rendered by the service provider to the appellant is having nexus with output service and has been used for output service or not. It cannot be a case of anybody that the SIM cards sold by the distributors or distributed by the distributors or service has not been used for providing output service namely, telecom service.In these circumstances, the decision in the case ofCadila Healthcare Ltd.(supra) may not be applicable to the present case sincein that case, the Honble High Court has observed that commission agent was not promoting the sales and there was no evidence to that effect.  Moreover, the facts are also not comparable since here what is required to be examined is whether input service has been used for providing output service or not which, in our opinion, has been used.5.     Learned  special counsel for respondent-Revenue submitted that show-cause notice had proposed demand on two grounds namely, nexus and non-availability  of invoices based on which credit has been taken.6.    In this context, learned counsel for the appellant  submitted that they have furnished copies of all the invoices and there is no objection for remanding the matter for the limited purpose of verification of invoices based  on which credit has been taken.7.    In view of the above, the issue as to whether the appellant is eligible for Cenvat credit  on input service provided by the distributors of SIM cards is held as admissible in favour of the appellant.  As regards the documents/invoices, the matter is remanded to the original adjudicating authority.  The appellant shall produce the copy of the invoices as per requirement of verification purpose and  if credit is admissible on the basis of documents, the same shall be allowed.   Appeal is disposed of in above terms.(Operative portion of the order has been pronounced in open court)



(S.K. MOHANTY)
JUDICIAL MEMBER 	(B.S.V. MURTHY)
TECHNICAL MEMBER

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