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2007 (11) TMI 275 - AT - Service TaxRefund -appellants has been granted a license from the telegraph authorities to run a private telephone exchange appellant s contention was that since they are only franchisee of BSNL, for which they receive a fixed commission; they are not liable to pay the service tax - Since the main contractor i.e. DoT has already paid the tax for telephone services, no service tax can be demanded from them matter remanded for fresh decision in view of Board s Circular No. 32/C/2000-CX, dt. 28-12-2000.
Issues:
1. Refund of service tax deposited by the appellant. 2. Liability of the appellant to pay service tax as a franchisee of BSNL. 3. Interpretation of the Indian Telegraph Act and its applicability to the case. 4. Consideration of Board's Circular No. 32/C/2000-CX in determining service tax liability. 5. Remand of the matter to the original Adjudicating Authority for fresh decision. Analysis: Issue 1: Refund of service tax deposited by the appellant The appellant sought a refund of service tax amounting to Rs. 6,835/- deposited in July 2002 along with interest of Rs. 5,543/- for the period Feb. 95 to July '02. The dispute arose from the appellant's contention that, being a franchisee of BSNL receiving a fixed commission, they were not liable to pay the service tax. However, the authorities rejected this argument, citing the license granted by the telecommunication authorities under the Indian Telegraph Act to operate a private telephone exchange. Issue 2: Liability of the appellant to pay service tax as a franchisee of BSNL The appellant argued that since they were only a sub-contractor of the Department of Telegraph (DoT) and DoT had already paid service tax for telephone services, they should not be held liable for service tax on the rent charged or commission earned. The Tribunal noted the appellant's position and decided to remand the matter for a fresh decision by the Adjudicating Authority, considering the payment of service tax by DoT on connections provided by the appellant. Issue 3: Interpretation of the Indian Telegraph Act and its applicability The Tribunal examined the provisions of the Indian Telegraph Act and the license issued to the appellant to install and operate a Group EPABX with Direct-inward-dialing facility. Based on the definition of taxable services and the powers conferred under the Act, it was held that the appellant was indeed liable to pay service tax. Issue 4: Consideration of Board's Circular No. 32/C/2000-CX The appellant referenced Board's Circular No. 32/C/2000-CX, dated 28-12-2000, in support of their argument regarding service tax liability. The Tribunal acknowledged this submission and directed the Adjudicating Authority to reevaluate the case in light of the circular before making a fresh decision. Issue 5: Remand of the matter for a fresh decision Ultimately, the Tribunal set aside the earlier order and remanded the matter to the original Adjudicating Authority for a fresh decision. The appellant was granted the opportunity to present their arguments and contentions before the Adjudicating Authority in the renewed proceedings. This comprehensive analysis of the judgment highlights the key issues, arguments presented, legal interpretations made, and the Tribunal's decision to remand the case for further consideration.
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