Telephone - Taxable Services - As appliable on or before 30-6-2012 - Service Tax

Telephone (w.e.f. 1.7.1994) With effect from 1-6-2007 (Finance Act, 2007), this service has been deleted and now this service shall be taxable under new clause (zzzx) as "Telecommunication Service". Old provision, as effective upto 31-5-2007 are discussed below: What is taxable - 65(105)(b) Any service provided or to be provided to a subscriber, by the telegraph authority in relation to a telephone connection; Who is the receiver of service A subscriber Who is the provider of service The telegraph authority Who is liable to pay service tax Designated officers or persons of the service provider Meaning of Telegraph Authority - 65(111) "telegraph authority" has the meaning assigned to it in clause (6) of section 3 of the Indian Telegraph Act, 1885 and includes a person who has been granted a licence under the first proviso to sub-section (1) of section 4 of that Act; As per clause (6) of section 3 of Indian Telegraph Act, 1885; 'Telegraph Authority' means the Director-General of Posts and Telegraphs, and includes any officer empowered by him to perform all or any of the functions of the Telegraph authority under this Act."; As per first proviso to sub-section (1) of section 4 of the Indian Telegraph Act, 1885; "the Central Government may grant a license, on such conditions and in considerations of such payments as it thinks fit, to any person to establish, maintain or work a telegraph within any part of India."; Meaning of Subscriber - 65(104) "subscriber" means a person to whom any service of a telephone connection or a facsimile (FAX) or a leased circuit or a pager or a telegraph or a telex has been provided by the telegraph authority; Comments: 1.Cellular Phone service is taxable. 2.Public Mobile Trunking services are not taxable in this head. 3. Amount charged for add-on facility like roaming and message service is taxable. 4.Service provided to a service provider like Rental for junction links, Port Charges Infrastructure charges are not taxable. 5.Inter connection links charges not taxable under this head. 6.Initial charges are not taxable but adjustments made by the telegraph authority out of such charges are taxable. 7.Cost of mobile phone is not taxable. 8.Cost of sim card is taxable - ESCOTAL MOBILE COMMUNICATIONS LTD. v. UOI 2005 -TMI - 185 - HIGH COURT OF KERALA , AIRCELL DIGILINK INDIA LTD. v. CCE 2005 -TMI - 161 - CESTAT, NEW DELHI and BHARTI CELLULAR LTD. V. CCE 2005 -TMI - 197 - CESTAT (NEW DELHI) 9.Service tax is payable on pay phones by licensees. 10.Service provided to diplomatic missions is exempt. 11.If discount is given to the customer, it will be deductible. 12.Surcharge for delayed payment will not be taxable. 13.In case of International Automatic or Plastic roaming facility provided by the operators service tax will be payable on gross bill inclusive of foreign usage bill or roaming surcharge. 14.Departmentally run Public Telephones for local calls, guaranteed public telephone operation for local call, free telephone at Airports and hospital (no bill raised) are exempted services. 15. Service tax v. Sales Tax - Merely because service tax is imposed by Parliament on telephone connection to a subscriber, it cannot mean that State Governments could not impose any tax on rentals collected from subscribers - State of Uttar Pradesh v. UOI 2005 -TMI - 143 - SUPREME COURT OF IND 16. Whether an activity is service or sale will be decided by substance of transaction in context of contract between parties or if it is a statutory contract, in light of relevant Rules and Regulations - An activity which might otherwise be 'service' may answer description of 'sale' within meaning of 'statute' - Further, an activity may be service for purpose of one statute may be sale under another - Even under same statute, an activity may be service under one set of facts and sale under another set - State of Uttar Pradesh v. UOI 2005 -TMI - 143 - SUPREME COURT OF IND 17. Amount Charged by the PCO operator from the customer has no relevance - Bharti Infotel Limited v. CCE, Bhopal - 2006 -TMI - 264 - CESTAT, New Delhi 18. Use of telephone services is liable to service tax at all as it a contract of pure service - BHARAT SANCHAR NIGAM LTD. Versus UNION OF INDIA - 2006 -TMI - 309 - Supreme court 19. Whether sale of SIM cards constitutes sale or not - Matter remanded - BHARAT SANCHAR NIGAM LTD. Versus UNION OF INDIA - 2006 -TMI - 309 - Supreme court 20. CBEC in its circular no. 90 /1/2007-ST dated 3-1-2007, has clarified that, the domestic telecom operators providing roaming service to international in-bound roamers are liable to pay service tax on the amount received through the home network on account of service provided to such international roaming subscriber.