Extract from the order:
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The facts of the case [G.R. Movers v. CCE, Lucknow (CESTAT, NEW DELHI BENCH)] are being illustrated by considering sale of sim-cards for activation of mobile service with assumed value of Rs. 500/-. BSNL issues sim-cards costing Rs. 500/- plus service tax of Rs. 50/- to the distributor as per terms of an agreement against appropriate security. Distributor sells the card to the customer, collects Rs. 550 from customer by cheque in the name of BSNL and deposits it with BSNL. BSNL pays service tax of Rs. 50 to Govt. Out of the remaining Rs. 500 constituting the value of service rendered by BSNL, Rs. 15 is paid to the distributor. Revenue is asking service tax on this Rs. 15 from the distributor considering it as consideration for business auxiliary service rendered by distributor to BSNL in marketing the service of BSNL.
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This is not a case where the distributor is doing a service, billing for it, collecting the charges for the service and then BSNL charging for the services to the customers through a separate process. On the contrary this is a case where BSNL sells the cards through the distributor and collects money from customers through the distributor and then pays to the distributor out of consideration received by them from their customers on which consideration service tax is first discharged by BSNL. That is to say the transactions of both the parties are essentially one and payment on the full value of service occurs earlier than payment of commission to the distributor. Further payment of tax on full value of service rendered by the principal, that is BSNL, is easily verifiable unlike in the case of services rendered by many other sub-contractors for other type of services.
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Though the correct procedure for discharge of the service tax liability by the two parties is that the distributors raise bills for commissions that is due to them along with service tax and BSNL takes Cenvat credit of tax paid by distributors for discharging liability on the telecommunication service provided by BSNL, such procedure does not result in extra realization of Revenue. Considering the special nature of the impugned activities and the fact that it can be easily verified that full taxable value of the service provided by BSNL to customers is subjected to tax, we are of the view that there is no case to undo decisions already taken by the Tribunal in this regard. A contrary approach will result in a difference in value that is taxed for mobile telecom service according to the decision of the Apex Court in the case of Commissioner v. BPL Mobile Cellular Ltd. - 2011 (24) STR, 75. We also note that this issue has lost relevance for the future because of exemption under Notification 25/2012-ST-S. No. 29 for this type of service.
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The decision in the case of G.R. Movers v. CCE was also followed in the case of Amhar Associates v. CCE, Lucknow (CESTAT, NEW DELHI BENCH)