Order Date – 19 January 2023

Parties: M/s J.K. Enterprises Vs Principal Commissioner, Central Excise Commissionerate, Alwar

Facts – 

• The Appellant, M/s J.K. Enterprises, buys and sells SIM cards, recharge coupons etc. for mobile phones under a super distributor agreement with M/s Vodaphone Essar Digilink Ltd.
• A show cause notice dated 11.10.2013 covering the period April 2008 to March 2012 was issued to the appellant alleging that it was providing business auxiliary service to M/s Vodaphone Essar Digilink Ltd, accordingly, service tax was demanded and penalties were proposed to be imposed.

Issue –

• Whether buying and selling of SIM cards, etc. falls under business auxiliary service?

Order – 

• The Tribunal observed that the appellant is trading in SIM cards and recharge coupons and, is not rendering any service to the principal. It is buying the SIM cards from it and selling them to others. Such arrangements are made by various telecom operators whereby they appoint distributors to buy and sell their SIM cards.
• It was held that Tribunal has consistently held that buying and selling of SIM cards and recharge coupons does not amount to providing business auxiliary service to the principal in several cases.
• The Tribunal held that the department was fully aware of the activities of the appellant and had issued a show cause notice on 26.04.2011 and a second show cause notice could not have been issued invoking extended period of limitation. On this ground alone the entire show cause notice needs to be set aside.
• Hence the appeal is allowed.