2019 (1) TMI 1819 - AT - Service Tax

CENVAT Credit - Telecom Services - for payment of said Service Tax, appellant used Cenvat credit of Service Tax paid by appellant to the other telecom operators along with interconnection usage charges paid to the other telecom operators - Revenue has raised objection at availment of said credit by the appellant on the ground that the IOABAS offices is neither providing any service nor receiving any services and it is only a simple billing office - HELD THAT - IOABAS is part and parcel of the BSNL and appellant is also part and parcel of BSNL and it is only a separate section created for handling work as per the guidelines of Telecom Regulatory Authority of India - from the same IOABAS, Revenue has accepted payment of Service Tax, therefore, there are no grounds for Revenue to deny Cenvat credit to IOABAS since IOABAS and BSNL are one and the same. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availment of Cenvat credit by the appellant for Service Tax paid on interconnection usage charges.
2. Validity of the objection raised by Revenue on the grounds that the Inter-Operator Billing & Accounting System (IOABAS) office is not providing or receiving any services.

The judgment pertains to the appellant, a telecom service provider, involved in the provision of 'Telecom Services' and the payment of Interconnection Usage Charges (IUC). The appellant had 43 separate Service Tax registrations for different offices providing services related to interconnection usage. As per Telecom Regulatory Authority of India (TRAI) guidelines, the appellant had to establish a single office, IOABAS, to handle billing for interconnection usage charges among different telecom operators. The IOABAS office raised and settled bills, took Cenvat credit of Service Tax paid on usage charges, and facilitated billing processes. The Revenue objected to the appellant's Cenvat credit claim, arguing that IOABAS was merely a billing office without providing or receiving services. The impugned order confirmed the demand based on this objection.

Upon review, the Tribunal noted that IOABAS is an integral part of the appellant and BSNL, serving a specific function as per TRAI guidelines. Despite the Revenue's objection, payments of Service Tax were accepted from IOABAS, indicating its association with the appellant. The Tribunal concluded that there was no valid reason for the Revenue to deny Cenvat credit to IOABAS, considering it as part and parcel of the appellant and BSNL. Consequently, the impugned order was set aside, and the appeal was allowed, emphasizing the unity of IOABAS and the appellant within BSNL.

The judgment highlights the importance of understanding the operational structure within a larger organization, the compliance with regulatory guidelines, and the eligibility of entities within the same organization to avail tax credits based on their functional roles. It clarifies the significance of consistency in tax treatment and the necessity of considering the organizational context while assessing tax liabilities and credits.