Dss Mobile Communications Ltd. Vs. Commissioner of Central Excise - Court Judgment

Excerpt:
1. commissioner (appeals) on 19.05.2004. the issue raised in the show-cause notice was that the following charges have been omitted to be included in the taxable value for the purpose of payment of service tax for the period august 1997 to march 2000: b) the recommendation fee charged from the customer after the initial disconnection; and c) wireless processing charges fee, for providing continuous paging service.2. the question before the commissioner (appeals) was whether the service rendered by the respondent under the category of "radio paging services" would be subjected to service tax. i have examined the case records and submissions. from the statement of facts submitted by the appellant also it is amply clear that reconnection charges are incurred for activating the process of.....

Judgment:
1. Commissioner (Appeals) on 19.05.2004. The issue raised in the show-cause notice was that the following charges have been omitted to be included in the taxable value for the purpose of payment of service tax for the period August 1997 to March 2000: b) the recommendation fee charged from the customer after the initial disconnection; and c) wireless processing charges fee, for providing continuous paging service.

2. The question before the Commissioner (Appeals) was whether the service rendered by the respondent under the category of "Radio Paging Services" would be subjected to Service Tax.

I have examined the case records and submissions. From the statement of facts submitted by the Appellant also it is amply clear that Reconnection charges are incurred for activating the process of making the pager work. This is akin or similar to the nature of SIM Card which is again a component essential for activating the process of Transmission in respect of Mobile Phones.

The contention of the Appellant WPC charges paid to DOT is not service is not acceptable as this is also charged ultimately from the customers directly or directly for providing continues paging services though paid initially to DOT and collected from the customers latter.

As per Section 67 which is an inclusive section, valuation of taxable services for charging service tax has been explained as includes the amount paid for the adjustments made by the telegraphy authority from any deposits made by the subscriber at the time of application for telephone connection or pager but does not include only initial deposit. Also it is clear that the service tax will be chargeable on the gross amount charged from the subscriber.

4. As the issue relating to registration lees charged from the customer has since been dropped by the adjudicating authority vide his Order-in-Appeal dated 31.10.2003, the remaining two issues were to be considered by the Commissioner (Appeals) in the impugned order and he has come to the conclusion that there is no merit in their appeal.

5. The ld. SDR relies upon the Kerala High Court judgment in the case of Escotal Mobile Communications Ltd. v. Union of India 2004 (177) E.LT.99 (Ker.) which concluded as under: (b) Both the selling of the SIM card and the process of activation are 'services' provided by the mobile cellular telephone companies to the subscriber, and squarely fall within the definition of 'taxable service' as defined in Section 65(72)(b) of the Finance Act. They are also exigible to service tax on the value of 'taxable service' as defined in Section 67 of the Finance Act.

6. I have examined the case records and heard the ld. SDR. None represented the appellants despite notice and there is no request for adjournment either. Accordingly, the case has been taken up for final conclusion. The appellants have agitated the levy of Service Tax in respect of the reconnection fee charged by them from their customers after the initial disconnection and also on the wireless processing charges fee for providing continuous paging service for their customers. Relying upon the ratio of the decision arrived at by the Kerala High Court judgment in Escotal Mobile Communications Ltd. and also considering the fact that WPC charges is also charged ultimately from the customers directly I do not find any need to interfere with the impugned order.