2022 (4) TMI 307 - AT - Service Tax

Rectification of mistake - error apparent on the face of record or not - demand of service tax under Lease Circuit Service - period 01.01.2008 to 31.03.2011 - HELD THAT - The Leased Circuit Service (for internet) has remained all along exempt under the exclusion clause in Section 65(109a) of the Finance Act, which defines telecommunication service. Thus, there is no error in the final order dated 05.08.2019 of this Tribunal. The miscellaneous application for rectification of mistake by Revenue is dismissed, being without any merit.

Summary

Issues:
Rectification of mistake in the Final Order regarding demand confirmation under 'Lease Circuit Service' for two different periods.

Analysis:
The case involved a Miscellaneous Application by the Revenue seeking rectification of a mistake in the Final Order related to demand confirmation under 'Lease Circuit Service' for two distinct periods. The Revenue contended that there was an error in the definition of taxable service post a modification effective from 01.06.2007, where 'Leased Circuit Service' merged into 'telecommunication service,' replacing 'subscriber' with 'person.' The Revenue argued that due to this change, demands for the period 01.06.2007 to 31.03.2012 should have been upheld, contrary to the Final Order's decision. However, the appellant's counsel highlighted that the exclusion clause under Section 65(109a) of the Finance Act exempted 'Leased Circuit Service' (for internet) from service tax liability even after the amendment in the definition of telecommunication service. The Tribunal concurred, emphasizing that the service remained exempt under the exclusion clause, leading to the dismissal of the Revenue's application for rectification of mistake.

In the Final Order, the Tribunal extensively discussed the arguments presented by both parties. The Revenue asserted that the change in the definition of taxable service from 'Leased Circuit Service' to 'telecommunication service' post 01.06.2007 necessitated the demand confirmation for the subsequent period. They highlighted the replacement of 'subscriber' with 'person' in the definition, indicating a shift in the tax liability. Conversely, the appellant's counsel referenced the exclusion clause under Section 65(109a) of the Finance Act, emphasizing that 'Leased Circuit Service' for internet remained exempt from service tax liability despite the amendment. The Tribunal, after thorough consideration of the contentions and examination of the records, upheld the initial decision, dismissing the Revenue's application for rectification of mistake.

The Tribunal's analysis delved into the specific provisions and definitions under the Finance Act concerning 'Leased Circuit Service' and 'telecommunication service.' The discussion revolved around the impact of the amendment on the tax liability for the respective periods, focusing on the crucial distinction between 'subscriber' and 'person' in determining the applicability of service tax. The Tribunal's detailed examination of the legal framework, including relevant circulars and precedents, culminated in the reaffirmation of the exemption status of 'Leased Circuit Service' under the exclusion clause, thereby rejecting the Revenue's plea for rectification based on the alleged mistake in the Final Order.

Overall, the Tribunal's decision was grounded in a meticulous analysis of the legal provisions, definitions, and precedents related to 'Leased Circuit Service' and 'telecommunication service.' By emphasizing the significance of the exclusion clause and the unchanged exemption status of the service in question, the Tribunal maintained the integrity of its initial judgment, ultimately dismissing the Revenue's application for rectification of mistake.