Delhi HC Asks CESTAT To Decide If Tax On Services Purchased By Prepaid Mobile Subscribers From Existing Balance Would Amount To Double-Tax
The Delhi High Court has asked the Customs Excise & Service Tax Appellate Tribunal to decide whether levy of tax on the services purchased by a prepaid subscriber of Tata Teleservices, using the existing mobile balance on which tax was already paid, would amount to double taxation.Considering that the matter would involve factual evaluation of the manner in which services are provided...
The Delhi High Court has asked the Customs Excise & Service Tax Appellate Tribunal to decide whether levy of tax on the services purchased by a prepaid subscriber of Tata Teleservices, using the existing mobile balance on which tax was already paid, would amount to double taxation.
Considering that the matter would involve factual evaluation of the manner in which services are provided and charged by the company, a division bench of Justices Prathiba M. Singh and Rajneesh Kumar Gupta relegated it to the Tribunal. It observed,
“Considering the factual nature of the issue and the fact that the impugned OIO is an appealable order, this Court is of the opinion that the same ought to be relegated to CESTAT for the purpose of adjudication after proper appreciation of facts.”
The Petitioner had sought quashing of an order passed by the GST Department confirming the demand of service tax to the tune of approx. Rs. 31 crores and imposing an equal amount of penalty, on the ground of double taxation.
The case of the Petitioner is that whenever consumers avail its services via a pre-paid voucher/package, they pay a lump sum amount, on which the service charges are deposited by the Petitioner. However, on the basis of available credit balance, if the consumer purchases any Value Added Service, since the credit balance has already been taxed no service tax is paid by the Petitioner on the second occasion.
However, the Department's case was that since the consumer was availing of the service, even on the second occasion, service tax would be liable to be paid on the said transaction.
“Clearly, the question as to whether service tax would be liable to be paid on the second occasion when the consumers avail the Value Added Services or similar services on the basis the credit balance, would be a factual issue which have to be considered after examining the manner in which services are provided and charged by the Petitioner,” Court said.
It has directed the Petitioner to present its appeal before CESTAT within four weeks, subject to depositing a sum of Rs. 1 crore.
Appearance: Mr. Tarun Gulati Sr. Adv., with Mr. Kumar Visalaksh, Mr. Arihant Tater, Mr. Ajitesh Dayal Singh and Mr. Pramod Kandpal Advocates for Petitioner; Mr. Arun Khatri, Sr. Standing Counsel (CGST) with Ms. Poonam Rani, and Mr. Anoshuka Bhalla, Advocates, Ms. Shelly Dixit, Tracy Sebastian for Respondent
Case title: Tata Teleservices Limited v. The Commissioner CGST Delhi East & Anr.
Citation: 2025 LiveLaw (Del) 283
Case no.: W.P.(C) 1142/2025