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ST - Telecom Infrastructure Services are more appropriately classifiable under Business Support Service - demand under BAS is not sustainable: CESTAT

By TIOL News Service

MUMBAI, JULY 31, 2014: FOLLOWING are the service tax demands confirmed against the appellant by the CCE, Thane-I and against which order the appellant is before the CESTAT.

Sr.No.

Description of service

Category of service

Demand raised

Demand dropped

Demand confirmed

1

2

3

4

5

6

1

Sale of Sim Cards

Telephone Services

14.004,262

-

14,004,262

2

International inbound roaming

Telephone Services

58,600,798

51,830,179

6,770,619

3

Inter Usage Charges (IUC)

Telephone Services

45,506,219

45,506,219

-

4

Passive Telecom Infra Services

Business Auxiliary Services

24,385,419

-

24,385,419

5

Credit Availed on Customs Cess

CENVAT Credit

52,410

-

52,410

6

Total

 

142,549,108

97,336,398

45,212,710

It is submitted that the applicant had already paid an amount of Rs.95,00,000/- in respect of International Inbound Roaming, Inter Usage Charges (IUC), Credit availed on Customs Cess. The contention is that in respect of Passive Telecom Infra Services, the applicants were charged under Business Auxiliary Services whereas the Tribunal in the case of B.S.N.L. Vs. Commissioner of Central Excise, Jaipur-I held that the activity undertaken by the assessee, which is similar to the applicant, is taxable under the category of Business Support Service. Hence, the demand in respect of Passive Telecom Infra Services is not sustainable.

In respect of the main demand of Rs.1,40,04,262/- which is in respect of sale of SIM cards, the contention is that during the period in dispute there was confusion in the industry whether it is a supply of SIM cards or it is service; that they had already paid an amount of Rs.1,08,00,000/- towards State Sales Tax; that part of the demand is time barred and the demands in respect of normal period comes to approximately Rs.15,00,000/-.

The Revenue representative submitted that in respect of supply of SIM card the issue is settled by the Tribunal in the case of Bharati Tele-Ventures Ltd. Vs. Commissioner of C.Ex., Pune-III 2014-TIOL-492-CESTAT-MUM whereby Tribunal held that sale of SIM Cards are not sale of goods but services and service tax is leviable.

The Bench inter alia observed -

+ Passive Telecom Infrastructure Services is more appropriately classifiable under Business Support Service where the present demand is in the Business Auxiliary Service and applicants are paying appropriate service tax after the introduction of business support service w.e.f. 1.5.2006.

+ In this view of the matter, amount of Rs.95,00,000/- deposited is sufficient for hearing of the appeal against the demand of International Inbound Roaming, Inter Usage Charges, Passive Telecom Infra Services and Credit availed on Customs Cess.

+ In respect of Rs.1,40,04,262/- which is in respect of supply of SIM Card, the issue is settled by the Supreme Court in favour of the Revenue; that the sale of SIM Cards are not sale of goods but services and service tax is leviable on supply of SIM Cards.

Taking a prima facie view that there is no ground to waive pre-deposit in respect of the service tax demand confirmed in respect of the supply of SIM Cards, the Bench directed the applicant to deposit 50% of the amount and report compliance.

(See 2014-TIOL-1376-CESTAT-MUM)


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