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2007 DIGILAW 1629 (RAJ)

Bharti Hexacom Ltd. v. Union of India

2007-08-27

MAHESH CHANDRA SHARMA, R.M.LODHA

body2007
JUDGMENT 1. - Rule. Returnable forthwith. Mr. Kamlakar Sharma waives service for respondents. 2. In the light of the controversy raised in the writ petition, we are of the view that the writ petition deserves to be disposed of finally at this stage. We 5 proceed accordingly. 3. The petitioner is a company registered under the Indian Companies Act, 1956. They are engaged in providing cellular mobile services. The petitioner claims to be selling SIM cards to their customers and sales tax is said to have been charged on the sale of those SIM cards. 4. Two show cause notices (1.12.2005 and 28.12.2005) were issued to the petitioner demanding service tax towards the amount received from sale of SIM cards during the period 1st April, 2003 to 30th September, 2005 in terms of Finance Act, 1994 which introduced the telephone service as a taxable service w.e.f. 1st July, 1994. 5. In response to show cause notices, inter-elle the petitioner set-up the defence that the SIM cards were goods and the customers paid sales tax thereon, and, therefore, the SIM cards were not chargeable to service tax. 6. By the order-in-original dated 2nd March, 2006, the Commissioner of Central Excise, Jaipur-I confirmed the demand of service tax to the tune of 20 Rs. 85,83,237/-. In the said order, the Commissioner of Central Excise, Jaipur-I also imposed equal amount to penalty under Section 78 of the Finance Act, 1994. The Commissioner of Central Excise, Jaipur-I further imposed penalty of Rs. 100/- per day for the delay in depositing the service tax. 7. The petitioner has challenged the aforesaid order of the 25 Commissioner of Central Excise, Jaipur-I by filing an appeal before the Customs, Excise and Service Tax Appellate Tribunal (for short 'the Tribunal') and also made an application for waiver of pre-deposit for maintaining the said appeal. 8. The Tribunal rejected the said application by its order dated 8th 30 August, 2006. However, it asked the present petitioner to deposit the amount within eight weeks as per the order dated 2nd March, 2006 passed by the 1 Commissioner of Central Excise, Jaipur-I failing which it was directed that the appeal shall stand dismissed. It is this order that is impugned in the present writ petition. 9. However, it asked the present petitioner to deposit the amount within eight weeks as per the order dated 2nd March, 2006 passed by the 1 Commissioner of Central Excise, Jaipur-I failing which it was directed that the appeal shall stand dismissed. It is this order that is impugned in the present writ petition. 9. The waiver of pre-deposit was principally sought for by the petitioner 5 on the basis of the decision of the Tribunal in the case of M/s. Idea Mobile Communications Ltd. v. Commissioner of Central Excise given on 25th May, 2006 wherein the Tribunal held that once the sales-tax has already been paid on the sale of SIM cards, the service tax was not leviable on which the sales tax was collected. The support was also derived from the decision of 10 the Supreme court in the case of Supreme court in the case of Bharat Sanchar Nigam Ltd. and another v. Union of India, (2006) 2 STR 161 . 10. The counsel for the petitioner contended before us in challenging the order of the Tribunal what was contended before the Tribunal in support of that case for waiver of pre-deposit. The counsel would submit 15 that the Tribunal having already taken the view that in a case where SIM cards were sold by the service provider and the sales tax was charged thereon and where the levy of sales tax has not been challenged, the service tax was riot leviable on the sale of SIM cards. According to the counsel, as far as his information goes, the order of the Tribunal in the 20 case of M/s. Idea Mobile Communications Ltd. has not been challenged. He would submit that the issue in the appeal before the Tribunal is identical to the issue decided by the Tribunal in the case of Idea Mobile Communications and, therefore, a very strong prima facie case has been shown by the petitioner founded on the decision of the Tribunal itself and 25 a clear case of undue hardship was made out. He relied upon some of the decisions of the Tribunal and the Calcutta and Allahabad High Courts in this regard. 11. On the other hand, Mr. Kamlakar Sharma the counsel for the department submitted that by mere showing prima facie case, a case for 30 undue hardship is not made out. He relied upon some of the decisions of the Tribunal and the Calcutta and Allahabad High Courts in this regard. 11. On the other hand, Mr. Kamlakar Sharma the counsel for the department submitted that by mere showing prima facie case, a case for 30 undue hardship is not made out. It is the inability of the appellant to pay the demand that is guiding factory in considering undue hardship under Section 35F of Indian Excise Act, 1944. He relied upon the decision of the Supreme court in the case of State of Haryana v. Maruti Udyog Ltd. and others, (2000) 7 SCC 348 . 12. The three Judge bench of the Supreme court in the case of Bharat Sanchar Nigam Limited (supra) was concerned with the question relating to the nature of transaction of mobile phone connections. The questions before the Supreme court was as to whether such transaction was a sale or was it a service or was it both? For the puroses of the present controversy, it is not 40 necessary to refer to the judgment of the Supreme Court in the case of Bharat Sanchar Nigam Limited extensively. The observations made by the Supreme Court in paragraphs 66, 80 and 82 of the report shall suffice. The said paragraphs read thus : "66. For the reasons stated by us earlier we hold that the 45 electromagnetic waves are not 'goods' :within the meaning of the word either in Art. 366(12) or in the State Legislations. It is not in the circumstances necessary for us to determine whether the telephone system including the telephone exchange was not goods but immovable property as contended by some of the 50 petitioners. 80. It is not possible for this court to opine finally on the issue. What a SIM card represents is ultimately a question of act as has been correctly submitted by the States_ In determining the issue, however the Assessing Authorities will have to keep in mind the following 5 principles : If the SIM card is not sold by the assessee to the subscribers but is merely part of the services rendered by the service providers, then a SIM card cannot be charged separately to sales tax. It would depend ultimately upon the intention of the parties. It would depend ultimately upon the intention of the parties. If the parties intended that the SIM card would be a separate object of sale, to it would be open to the Sales Tax Authorities to levy sales tax thereon. There is insufficient material on the basis of which we can reach a decision. However, we emphasis that if the sale of a SIM card is merely incidental to the service being provided and only facilitates the identification of the subscribers, their credit and other details, it would 15 not be assessable to sales tax. In our opinion the High Court ought to have finally determined the issue. In any event, the High Court erred in including the cost of the service in the value of the SIM card by relying on the aspects doctrine. That doctrine merely deals with legislative competence. As has been succinctly stated in Federation of Hotel & Restaurant Association of India v. Union of India, (1989) 3 SCC 634 , "subjects which in one aspect and for one purpose fall within the power of a particular legislature may in another aspect and for another purpose fall within another legislative power. They might be overlapping; but the overlapping must be in law. The same transaction 25 may involve two or more taxable events in its different aspects. But the fact that there is overlapping does not detract from the distinctiveness of the aspects". No one denies the legislative competence of states to levy sales tax on sales provided that the necessary concomitants of a sale are present in the transaction and the sale is distinctly discernible 30 in the transaction. 82. For the same reason the Central cannot include the value of the SIM cards, if they are found ultimately to be goods, in the cost of the service. As was held by us in Gujarat Ambuja Cements Ltd. v. Union of India, (2005) 4 SCC 214 , 228 . "This mutual exclusivity which has been reflected in Article 246(1) means that taxing entries must be construed so as to maintain exclusivity. Although generally speaking, a liberal interpretation must be given to taxing entries, this would not bring within its purview a tax on subject-matter which a fair reading of the entry does not cover. "This mutual exclusivity which has been reflected in Article 246(1) means that taxing entries must be construed so as to maintain exclusivity. Although generally speaking, a liberal interpretation must be given to taxing entries, this would not bring within its purview a tax on subject-matter which a fair reading of the entry does not cover. If in 40 substance, the statute is not referable to a field given to the State, the Court will not by any principle of interpretation allow a statute not covered by it to intrude upon this field." 13. A careful reading of the aforesaid observation leaves no manner of doubt that if the intention of the parties were to sell the SIM cards, such sale of SIM cards would be sale of goods and liable to the State Sales Tax and in that event the value of the SIM cards cannot be included in the cost of service and no service tax shall be leviable. On the other hand, if the SIM cards were not sold to the subscribers and the provision of SIM cards to the subscribers was incidental to the service being provided, such transaction would not be assessable to the State Sales Tax and that transaction would be liable to service tax 14. Founded on the aforesaid law laid down by the Supreme Court in the case of Bharat Sanchar Nigam Limited, the Tribunal at its South Zonal Bench at Bangalore in the appeal filed by M/s. Idea Mobile Communications Limited held that the service tax is not leviable on the sale of SIM cards on which the sales tax has been collected. The order is short and we may reproduce the order of the Tribunal as it is: "This appeal arises from 01A No. 23/03 dated 31.3.2003 by which service tax has been levied on the ground that assessee is rendering services on cellular phones. That they did not reveal that they had not incorporated the activation charges in the form of the price of SIM card which they are collecting from their subscribers while computing the value of taxable services. The matter was adjudicated by the Kerala high Court confirming payment of service tax, penalty and interest. That they did not reveal that they had not incorporated the activation charges in the form of the price of SIM card which they are collecting from their subscribers while computing the value of taxable services. The matter was adjudicated by the Kerala high Court confirming payment of service tax, penalty and interest. However this issue was taken up before the Apex Court in the case of Bharat Sanchar Nigam Ltd. and another v. UOI, in Writ Petition (Civil) No. 183 of 2003 wherein the Apex Court has remanded the matter to determine as to whether the sales tax has been levied or not. Learned counsel submits that they are not challenging the levy of sales tax in the matter and the sale of SIM cards to goods. Once the transaction is considered as sale of goods then the question of considering the activity as auxiliary service cannot be considered and service tax cannot be imposed. They do not want to contest on the levy of sales tax cannot be imposed. They do not want to contest on the levy of sales tax as the same has already been paid. Learned DR submits that the matter can be remanded to the authorities to reconsider the aspect of the levy of sales tax. Learned counsel in counter submitted that they are not challenging the levy of sales tax and conceded that the item sold by them are goods and once sales tax have been levied, there cannot be levy of service tax as there is mutual exclusivity in terms of Apex Court in the case of Gujarat Ambuja Cements Ltd. v. UOI, 2005(4) SSC (214, 228) which has been quoted in the case of BSNL v. UOI (supra). The quoted para is as follows : This mutual exclusivity which has been reflected in Article 246(1) means that taxing entries must be construed so as to maintain exclusivity. Although generally speaking, a liberal interpretation must be given to taxing entries. This would not bring within its purview a tax no subject-matter which a fair reading of the entry does not cover. Although generally speaking, a liberal interpretation must be given to taxing entries. This would not bring within its purview a tax no subject-matter which a fair reading of the entry does not cover. If in substance the statute is not referable to a field given to the State, by any principle of interpretation allow a statute not covered by it to intrude upon this field." The learned counsel submits that sales tax being State subject, therefore, the centre cannot claim Service Tax on that item. On a careful consideration, we notice that the assessee is not contesting the levy of sales tax. They have already paid the sales tax. It follows that service taxis not leviable on the item on which sales tax has been collected. In terms of the Apex Court judgment and the paragraph quoted (supra) the appellants contention is so required to be accepted. In terms of the Apex Court judgment, the levy of service tax is not sustainable. The appeal is allowed with consequential relief it any." 15. There was not firm reply by any of the counsel for the parties as to whether the order of the Tribunal dated 25th May, 2006 in M/s. Idea Mobile Communications Ltd. has been carried in appeal or the said order has attained finality. The counsel for the petitioner did submit that M/s. Idea Mobile Communications Ltd., has entered caveat before the Supreme Court that they be heard if there was challenge to the order dated 25th May, 2006 passed by the Tribunal, but so far M/s. Idea Mobile Communications Ltd., has not received any intimation of having been filed an appeal by the department before the Supreme Court. 16. The Tribunal, thus, has taken the view that where the SIM cards have been sold by the service provider and sales tax have been levied thereon and there has been no challenge of levy of sales tax in the matter, the sale of such SIM cards cannot attract service tax and the levy of service tax thereon is unsustainable. 17. The Tribunal, thus, has taken the view that where the SIM cards have been sold by the service provider and sales tax have been levied thereon and there has been no challenge of levy of sales tax in the matter, the sale of such SIM cards cannot attract service tax and the levy of service tax thereon is unsustainable. 17. Our attention was also invited to the order of Tribunal, West Zone Bench at Mumbai passed on 1st March, 2007 in the case of BPL Mobile Communications Ltd., Hutchison Essar Ltd., Bharat' Tele-ventures Ltd. wherein the Tribunal relied upon its decision in the case of M/s. Idea Mobile Communications Ltd., and by following the said decision took the view that the transaction accepted by the assessee as the sale of goods, service tax cannot be levied on the value of the SIM cards. The order passed by the Tribunal on 1st March, 2007 in the case of BPL Mobile Communications Ltd., 25 Hutchison Essar Ltd., Bharati Tele- ventures Ltd. to the extent it is relevant, is being extracted by us as it is : "3. We find that the issue as to whether the providing of telephone connection was sale of goods (SIM cards) or a contract of service, was decided against the assessees by the Hon'ble Kerala High Court's judgment in Escotel Mobile Communications Ltd. v. UOI, reported in 2002 (126) STC 475 (Ker) : (2003-TIOL-132-HC-Kerala-ST) . The matter was carried in appeal to the Apex Court which, vide its judgment reported in (2006) 3 SCC held that the centre cannot include the value of SIM cards, if they are found ultimately to be goods, in the cost of service, and remanded the matter to the Sales Tax authorities concerned for determination of the issue relating to SIM cards in the light of the observations contained in the judgment. The relevant paragraphs of the Apex Court's judgment are reproduced herein below : 85. This brings us to the decision of the Kerala High Court in Escotel. 86. In the case Escotel was admittedly engaged in selling cellular telephone instruments, SIM cards and other accessories and was also paying Central Sales Tax and Sales Tax under the Kerala General Sales Tax, 1963 as applicable. The question was one of the valuation of these goods. This brings us to the decision of the Kerala High Court in Escotel. 86. In the case Escotel was admittedly engaged in selling cellular telephone instruments, SIM cards and other accessories and was also paying Central Sales Tax and Sales Tax under the Kerala General Sales Tax, 1963 as applicable. The question was one of the valuation of these goods. State Sales Tax Authorities had sought to include the activation charges in the cost of the SIM card. It is contended by Escotel that the activation was part of the service on which service tax was being paid and could not be included within the purview of the sale. The Kerala High Court also dealt with the case of BPL, a service provider. so According to BPL, it did not sell cellular telephones. As far as SIM cards were concerned, it was submitted that they had no sale value. A SIM card merely represented a means of the access and identified the subscribers. This was part of the service of a telephone connection. The Court rejected this submission finding that the SIM card was "goods" within the definition of the word in the State Sates Tax Act 87. It is not possible for this Court to opine finally on the issue. What a SIM card represents is ultimately a question of fact as has been correctly submitted by the States. In determining the issue, however the Assessing Authorities will have to keep in mind the following principles : If the SIM card is not sold by the assessee to the subscribers but is merely part of the services rendered by the service providers, then a SIM card cannot be charged separately to sales tax. It would depend ultimately upon the intention of the parties. If the parties intended that the SIM card would be a separate object of sale, it would be open to the Sales Tax Authorities to levy sales tax thereon. There is insufficient material on the basis of which we can reach a decision. However, we emphasis that if the sale of a SIM card is merely incidental to the service being provided and only facilitates the identification of the subscribers, their credit and other details, it would not be assessable to sales tax. In our opinion the High Court ought not to have finally determined the issue. However, we emphasis that if the sale of a SIM card is merely incidental to the service being provided and only facilitates the identification of the subscribers, their credit and other details, it would not be assessable to sales tax. In our opinion the High Court ought not to have finally determined the issue. In any event, the High Court erred in including the cost of the service in the value of the SIM card by relying on the aspects doctrine. That doctrine merely deals with legislative competence. As has been succinctly stated in Federation of Hotel & Restaurant Association of India v. Union of India, (SCC pp. 652-53, pares 30-31) 88. No one denies the legislative competence of States to levy sales tax on sales provided that the necessary concomitants of a sale are present in the transaction and the sale is distinctly discernible in the transaction. This does not however allow State to entrench upon the Union List and tax services by including the cost of such service in the value of the goods. Even in those , composite contracts which are by legal fiction deemed to be divisible under Art. 366 (29A), the value of the goods involved in the execution of the whole transaction cannot be assessed to sales tax. As was said in Larsen & Toubro v. Union of India, (SCC p. 395, para 47) . 89. For the same reason the Centre cannot include the value of the SIM cards, if they are found ultimately to be goods, in the cost of the service. As was held by us in Gujarat Ambuja Cements Ltd. v. Union of India, (SCC at p. 228, para 23 . 90. We will therefore have to allow the appeals filed by BPL in Civil Appeals Nos. 3329-30 of 2002 and Escotel in Civil Appeal No 2408 of 2002 and remand the matter to the Sales Tax Authorities concerned for determination of the issue relating to SIM cards in the light of the observations contained in this judgment." 4. In the present case, the appellants have paid sales tax and are not challenging the levy thereof. Therefore, the transaction has been accepted by them to be a sale of gods. This being so, the question of considering the activity as an auxiliary service cannot be considered and service tax cannot be levied on the value of SIM cards. In the present case, the appellants have paid sales tax and are not challenging the levy thereof. Therefore, the transaction has been accepted by them to be a sale of gods. This being so, the question of considering the activity as an auxiliary service cannot be considered and service tax cannot be levied on the value of SIM cards. In the light of the Tribunal's order in Idea Mobile Communications Ltd. v. CCE, Trivandrum, 2006(4) STR 132 : (2006-TIOL-857-CESTAT-Bang) . 5. Following the ratio of the above judgments, we hold that the levy of service tax and imposition of penalty is not sustainable and accordingly set aside the impugned order and allow the appeals." 18. The Tribunal's decision in the case of Mis. Idea Mobile Communications Ltd. and BPL Communications Ltd, has been followed in yet another appeal of Bharti Tele Ventures Ltd. v. Commissioner of Central Excise & Customs, Pune the purposes of the application for waiver of pre-deposit of service tax. This is what the Tribunal said in its order dated 9th April, 2007: "This is an application for waiver of pre- deposit of service tax amounting to Rs. 78,27,798/- demanded by the Commissioner alongwith penalty of Rs. 25,25,701/-. The demand is for the period from July, 2002 to March, 2006. The issue involved viz. whether, service tax is payable on the value of SIM cards for the period July, 2002 to March, 2006 and whether service tax at the enhanced rate is liable to be paid in respect of vouchers and cards post paid, when there is a change in the rate of service tax during the period when the cards are sold and tax paid by the applicants and the date of actual rendering of service. 2. As regards the first issue, we find that the same is, prima facie, covered by the Tribunal's decision vide Order No. A/188-190/WZB/2007/C.l. dated 1.3.2007, wherein it has been held that once the sale tax is paid no SIM cards, service tax is not liable to be paid on the same. Since in the present case, sales tax has been paid on the SIM cards showing sale of goods, service tax cannot be demanded on the cards as the two are mutually exclusive. Since in the present case, sales tax has been paid on the SIM cards showing sale of goods, service tax cannot be demanded on the cards as the two are mutually exclusive. As regards the other issue regarding payment of differential tax on account of enhancement in the rate of tax from the date when the tax was actually paid by the applicants and the date on which the service is actually availed of, the Id. Advocates drew our attention to various Circulars of Board requiring them to pay service tax on receipt of payment which can be paid at the rate of prevalent at the time of payment of tax only. We, however, find that the circulars are silent regarding the relevant date for the purpose of determining the rate of tax. Prima facie, it appears that the issue is arguable and no case has been made out for complete waiver. We, therefore, direct pre-deposit of Rs. 6 lakhs (Rupees Six Lakhs) towards service tax on this issue, within a period of eight weeks from today, and report compliance by 14.6.2007. On such deposit, there shall be waiver of pre- deposit of balance amount of service tax and penalty and stay recovery thereof till the disposal of the appeal." 19. Having referred to the aforesaid decisions of the Tribunal now, it is time for us to consider the meaning of the expression 'undue hardship' in Section 35F of the Central Excise Act, 1944. As noticed above, the counsel for the department would urge that it is the inability to pay that is the guiding factory for considering the 'undue hardship' under Section 35F. We find it difficult to accept this as an absolute proposition. The expression 'undue hardship' has to be distinguished from the expression 'financial hardship', Financial hardship may be one of the components to determine undue hardship but cannot be the sole criteria for determination of the aspect of undue hardship. The expression 'undue hardship' is an expression of much wider connotation. The Courts seem to have taken the view that where strong prima facie case is made out by the assessee in challenging the order of the subordinate authority in appeal, that may justify the waiver of pre-deposit. As to whether strong prima facie case has been made out or not by a party would depend on the facts and circumstances of each case. As to whether strong prima facie case has been made out or not by a party would depend on the facts and circumstances of each case. In a case, where the controversy stands concluded by the decision of the Tribunal itself and the said decision has not been challenged and such decision has attained finality or where the decision of the Tribunal has been challenged but the operation of that decision has not been stayed or where the controversy is concluded by the decision of the High Court having attained finality or by the decision of the Supreme Court, surely, a strong prima facie case can be said to have been made out justifying waiver of pre-deposit. When there is direct decision on the point by the Tribunal which is final forum on facts, until such order is set aside or stayed, in our considered and thoughtful view, ordinarily the order of waiver of pre-deposit in an appeal raising identical issue may follow. 20. Our view finds support from the decision of the Calcutta High Court in the case of Bonogaigaon Refinery & Petrochem Ltd. v. Collector of Central Excise, 1994(69) E.L.T. 193 . In paragraph 31 of the report, the Calcutta High Court (Ruma Pal, J. as her Ladyship then was) held thus : "As already seen the phrase "undue hardship" would cover a case where the appellant has a strong prima facie case. The phrase also in my view covers a situation where there is an arguable case in the appeal. In the former case the Appellate Authority should dispense with the pre-deposit altogether on the basis of the authorities referred to earlier. In the latter case the authority would have to safeguard the interest of the revenue. The Collector has riot applied his mind to this aspect of the matter at all. He had to consider whether, if the deposit were waived, the interest of the revenue would be jeopardized. There was no suggestion or even allegation that there would be any jeopardy to the revenue if the pre-deposit were waived in the petitioner's case. The Collector has riot applied his mind to this aspect of the matter at all. He had to consider whether, if the deposit were waived, the interest of the revenue would be jeopardized. There was no suggestion or even allegation that there would be any jeopardy to the revenue if the pre-deposit were waived in the petitioner's case. Keeping in view the mandate that a discretionary power must be exercised in favour of the assessee unless there was good reasons to the contrary, no reason has been disclosed by the Collector for refusing to exercise his discretion in favour of the petitioner particularly when the revenue's interest was not said to be un-safeguarded. It is to be remanded that this Court, while remanding the matter back to the Collector had directed the petitioner to give an undertaking to this court that it would not deal with or dispose of any of its assets except in the usual course of business or with the leave of the court. This undertaking is still subsisting. The Collector did not reject this safeguard as inadequate. The demand relates to a period of the clearance had already been made. There is no question of the petitioner recovering the amount from its customers." 21. The Division Bench of the Allahabad High Court in the case of I.T.C. Ltd. v. Commissioner (Appeals), Customs and Central Excise, Meerut-1, 2005(184) E.L.T. 347 with reference to Section 35F of the Central Excise Act. 1944 observed that the court must examine as to whether the appellant has a strong prima facie case on merits. In paragraph 35 of the report, this is what the Division Bench of the Allahabad High Court held : "35. In view of the above, the aforesaid authorities make it clear that the Court should not grant interim relief/stay of the recovery merely by asking of a party. It has to maintain a balance between the rights of an individual and the State so far as the recovery of sovereign dues is concerned. While considering the application for stay/waiver of a pre-deposit, as required under the law, the Court must apply its mind as to whether the appellant has a strong prima facie case on merit. It has to maintain a balance between the rights of an individual and the State so far as the recovery of sovereign dues is concerned. While considering the application for stay/waiver of a pre-deposit, as required under the law, the Court must apply its mind as to whether the appellant has a strong prima facie case on merit. In case it is covered by the judgment of a Court/Tribunal binding upon the Appellate Authority, it should apply its mind as to whether in view of the said judgment, the appellant is likely to succeed on merit. If an appellant having strong prima facie case, is asked to deposit the amount of assessment so made or penalty so levied, it would cause undue hardship to him, though there may be no financial restrain on the appellant running in a good financial condition. The arguments that appellant is in a position to deposit or if he succeeds in appeal, he will be entitled to get the refund, are not the considerations for deciding the application. The order of the Appellate Authority itself must show that it had applied its mind to the issue raised by the appellant and it has been considered in accordance with the law. The expression "undue hardship" has a wider connotation as it takes within its ambit the case where the assessee is asked to deposit the amount even if he is likely to exonerate from the total liability on disposal of his appeal. Dispensation of deposit should also be allowed where two views are possible. While considering the application for interim relief, the Court must examine all pros and cons involved in the case and further examine that in case recover is not stayed, the right of appeal conferred by the legislature and refusal to exercise the discretionary power by the authority to stay/waiver the pre-deposit condition, would be reduced to nugatory/illusory. Undoubtedly, the interest of the Revenue cannot be jeopardised but that does not mean that in order to protect the interest of the Revenue, the Court or authority should exercise its duty under the law to take into consideration the rights and interest of an individual. Undoubtedly, the interest of the Revenue cannot be jeopardised but that does not mean that in order to protect the interest of the Revenue, the Court or authority should exercise its duty under the law to take into consideration the rights and interest of an individual. It is also clear that before any goods could be subjected to duty, it has to be established that it has been manufactured and it is marketable and to prove that it is marketable, the burden is on the Revenue and not on the manufacturer." 22. It is pertinent to notice that Allahabad High Court considered in paragraph 29 of its report, the judgment of Karnataka High Court in I.T.C. Ltd. v. Commissioner of Central Excise & Customs (Appeals) and others, ILR 2000 Kar. 25 . The Karnataka High Court while examining the issue of as pre-deposit under. Section 35F of the Central Excise Act, 1944 observed that where the case was fully covered in favour of the assessee by a binding precedent like that of the judgment of the Supreme Court, jurisdictional High Court or a Special Bench of the Tribunal then to still insist upon the deposit of duty and penalty levied would certainly cause undue hardship to the assessee. Karnataka High Court went on the hold that the absence of the financial hardship in such a case would be no ground to decline the dispensation of pre-deposit under the proviso to Section 35F. We find ourselves in agreement with the aforesaid observations of the Karnataka High Court. 23. We may now refer to the judgment of the Supreme court in the case of Maruti Udyog Ltd. In that case, the ambit and scope of the words "unable to pay the whole of the amount of tax assessed" used in proviso to Section 39(5) of the Haryana General Sales Tax Act was under consideration before the Supreme Court. Section 39 of the Haryana General Sales Tax Act, 1963 provided for an appeal by the assessee. Clause (5) of Section 39 is in the following terms : "39(5). Section 39 of the Haryana General Sales Tax Act, 1963 provided for an appeal by the assessee. Clause (5) of Section 39 is in the following terms : "39(5). No appeal shall be entertained unless it is filed within sixty days from the date of the order appealed against and the appellate authority is satisfied, that the amount of tax assessed and the penalty and interest, if any, recoverable from the persons has been paid : Provided that the said Authority, if satisfied that the person is unable to pay the whole of the amount of tax assessed, or the penalty imposed, or the interest due, he may, if the amount of tax and interest admitted by the appellant to be due has been paid, for reasons to be recorded in writing, entertain the appeal and may stay the recovery of the balance amount subject to the furnishing of a bank guarantee or adequate security in the prescribed manner to the satisfaction of the appellate authority. Provided further that in the case of an appeal against any order which has to be communicated by the appropriate authority to the appellant, the period of sixty days shall commence from the date of receipt of the copy of the order by the appellant and in the case of an appeal against any other order made under this Act, the time spent in obtaining the certified copy of the order shall be excluded in computing the period of sixty days." 24. The observations in the case of Maruti Udyog Ltd., relied upon by the counsel for the Department have to be read in the context of the words "unable to pay the whole of the amount of sales tax" occurring in proviso to sub-section (5) of Section 39 quoted above. Proviso to Section 35F of Central Excise Act, 1944 which provides for deposit of duty demanded or penalty levied during the pendency of appeal is materially different. Proviso to Section 35F of Central Excise Act, 1944 which provides for deposit of duty demanded or penalty levied during the pendency of appeal is materially different. The relevant provision of Section 35F for dispensation of pre-deposit reads thus: "Provided that where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue." 25. Under Section 35F of the Central Excise Act, 1944, the appellate authority may justify dispensation with the deposit of duty demanded or penalty levied if the appellant shows undue hardship. Proviso appended to Section 39 of the Haryana General Sales Tax Act, 1973 and the proviso to Section 35F of the Central Excise Act, 1944 are, thus, materially distinct and different. 26. In what we have discussed above, in the light of the direct decision of the Tribunal in the two cases, namely; (i) M/s. Idea Mobile Communications Ltd. v. Commissioner of Central Excise, Trivendrum decided on 25th May, 2006 ; and (ii) BPL Mobile Communications Ltd. Hutchison Essar Ltd. and Bharati Tele, Ventures Ltd. decided on 1st March, 2007 taking the final view in the matter that where there is sale of SIM cards as sale of good and sales tax has been levied thereon and there is no challenge to the levy of sales tax, the service tax is not leviable, we are of the view that a strong prima facie case has been made out by the petitioner that the petitioner has sold the SIM cards to the customers and the sales tax having been paid thereon and there being no challenge to the payment of the sales tax, the SIM cards are not chargeable to the service tax and that justifies the complete waiver of pre-deposit. 27. Consequently, we set aside the order dated 8th August, 2006 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi. The application made by the petitioner for waiver of pre-deposit during the pendency of the appeal in challenging the order in original dated 20th February, 2006 stands allowed. 27. Consequently, we set aside the order dated 8th August, 2006 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi. The application made by the petitioner for waiver of pre-deposit during the pendency of the appeal in challenging the order in original dated 20th February, 2006 stands allowed. The Tribunal shall hear and decide the appeal in accordance with law. 28. Rule is made absolute in aforesaid terms. The parties shall bear their own costs.Rule made absolute - Tribunal directed to decide Appeal. *******