Bharat Sanchar Nigam Ltd. Vs. the Commissioner of Central - Court Judgment

Excerpt:
1. the appellant is a psu. they have obtained clearance from the committee of secretaries for pursuing this appeal. in the impugned order-in-original, the commissioner of central excise trivendrum has confirmed service tax of rs. 1,82,27,550/- besides penalties. the department verified the records of the assessee and it was noticed by the investigating officers that the assessee had suppressed the value of taxable service in their st-3 returns in as much as it had not shown or paid service tax on the inter-connectivity usage charges received by them and hence proceedings were initiated and after completion of the proceedings, the impugned order had been passed confirming demands. the appellants submission is that the issue has been clarified by the board by their circular no. 91/2/07-st.....

Judgment:
1. The appellant is a PSU. They have obtained clearance from the Committee of Secretaries for pursuing this appeal. In the impugned order-in-original, the Commissioner of Central Excise Trivendrum has confirmed Service tax of Rs. 1,82,27,550/- besides penalties. The department verified the records of the assessee and it was noticed by the investigating officers that the assessee had suppressed the value of taxable service in their ST-3 returns in as much as it had not shown or paid service tax on the Inter-connectivity Usage Charges received by them and hence proceedings were initiated and after completion of the proceedings, the impugned order had been passed confirming demands. The appellants submission is that the issue has been clarified by the Board by their Circular No. 91/2/07-ST dated 12.3.07 in which it has been clarified that the Service tax is not leviable on the interconnectivity usage charges and it is also clarified that it will be applicable only from 2007 in terms of the new definition of ''Telecommunication Service" as incorporated by Clause 104 of Section 65 of the Finance Act 1994. Learned Counsel produced a copy of the Circular. Learned JCDR appears for the revenue and files a Fax message received from the Dy Commissioner Review Cell. The Fax message admits about the issue of the Board Circular cited supra. It is stated in the concluding para that The issue of taxability of IUC has been examined afresh and orders have been issued in this regard.

The substance of the Fax received by the JCDR is that the cited circular applies to the facts of the case. In view of this position, learned Counsel submits that they are eligible for the benefit and prays for allowing the stay application as well as the appeal as the Board has already issued circular in their favour. Learned JCDR prays for listing the mater for out of turn. In view of high revenue involved.

2. We have perused the circular dated 12.3.07 which clarifies about the levy of service tax on "interconnection services" provided by one telecom operator to another. Para 4 clarifies that the new definition of Telecommunication service has been incorporated vide Clause 104, Section 65 of the Finance Act 2007 and IUC has been specifically incorporated in the definition of "Telecommunication service" to make it a taxable service. It follows that the charges are required to be added from the date of passing of the Finance bill 2007. The period in question pertains to the earlier period. Therefore in terms of the said circular, the appellants are not required to discharge service tax on these charges collected by them. Therefore, they have a very strong case in their favour in terms of the said circular. Hence, the stay application is allowed granting waiver of pre-deposit and staying its recovery till the disposal of the appeal. Revenue is barred from recovering the amounts even after expiry of 180 days from the date of passing this order in terms of latest Supreme Court and High Court judgments. As the Revenue involved is high, matter to come up for final hearing on 30.5.08.