2017 (5) TMI 882 - AT - Service Tax

Reverse charge mechanism - Telecommunication services - outbound roaming services received from the foreign telecom service provider - whether the services provided by the overseas service provider is conforming to the telecommunication services defined under sub clause (zzzx) of section 65(105) ibid? - Held that - in order to fall under the taxable category, service provider must be a Telegraph Authority - in order to be considered as Telegraph Authority, the person has to be granted a license under the first provisio to sub section (1) of section 4 of the India Telegraph Act 1885. Admittedly in this case the Foreign Service provider has not been granted with any licenses under the Indian Telegraph Act 1885 and hence cannot be considered as a Telegraph Authority under the provisions of the Indian Telegraph Act 1885. This Tribunal in the case of TCS E-Serve Ltd. 2014 (6) TMI 655 - CESTAT MUMBAI , by relying on the circular dated 15.07.2011 has held that services provided by any person who is not a Telegraph Authority, is not liable to service tax either u/s 66 or u/s 66A ibid. Demand set aside - appeal allowed - decided in favor of assessee.

Summary

Issues:
1. Whether the appellant is liable to pay service tax under reverse charge mechanism for outbound roaming services received from a foreign telecom service provider.
2. Whether the services provided by the overseas service provider fall under the category of taxable telecommunication services.
3. Whether the appellant can be considered as a recipient of taxable services under section 66A of the Finance Act 1994.

Analysis:
1. The appellant entered into an agreement with a Foreign Telecom Service provider for connectivity to its subscribers, using the provider's network abroad. The department initiated proceedings for service tax payment, which was confirmed partially. The appellant appealed against the order, challenging the service tax demand. The Tribunal considered the appeal against the impugned order dated 09.12.2010 passed by the Commissioner of Customs and Central Excise (A) Jaipur.

2. The appellant argued that the services provided by the foreign telecom service provider did not fall under the taxable services defined under section 65(105) of the Finance Act 1994. They contended that the services were not provided by the overseas service provider as a "Telegraph Authority," thus outside the scope of telecom services. The appellant relied on circulars and previous court decisions to support their argument.

3. The Tribunal examined the definition of "Telegraph Authority" under the Indian Telegraph Act, 1885, which requires the person to be granted a license under the Act. As the foreign service provider did not hold such a license, they could not be considered a Telegraph Authority. Referring to a circular issued by CBEC and previous case law, the Tribunal concluded that services provided by a person not meeting the definition of a Telegraph Authority were not liable to service tax under section 66 or 66A of the Finance Act 1994. The Tribunal upheld the appeal, finding no infirmity in the impugned order and allowing the appeal.

This detailed analysis of the judgment highlights the key issues involved, the arguments presented by the parties, and the legal reasoning leading to the Tribunal's decision.