2015 (1) TMI 138 - AT - Service Tax

Business Support Service - Whether M/s Railtel Corporation of India Ltd. is liable to pay Service Tax on 13% fees received by them in respect of contracts relating to laying of Optical Fibre Cables under the head Business Support Service - Held that - Prima facie we find that 13% fees received by them is part of the works contract cost for laying Optical Fibre Cables and laying of Optical Fibre Cables under the category of works contract is not liable to Service Tax if it is in respect of railways. In this case, prima facie, we find that laying of Optical Fibre Cables has to be treated as works contract in respect of railways and therefore the fees received by the appellant has to be treated as part of .the works contract cost. Therefore, prima facie, it may not be appropriate to classify the service as Business Support Service for levy of Service Tax. Since we have found a prima facie case in favour of the appellant, there will be stay against recovery of the dues during the pendency of the appeal - Stay granted.

Summary

The judgment by Appellate Tribunal CESTAT Bangalore states that M/s Railtel Corporation of India Ltd. is not liable to pay Service Tax on 13% fees received for laying Optical Fibre Cables under the category of works contract for railways. The fees are considered part of the works contract cost, and therefore, the service cannot be classified as "Business Support Service" for levy of Service Tax. Stay granted against recovery of dues during the appeal.