2023 (9) TMI 68 - AT - Service Tax

Levy of Service Tax - international inbound roaming charges received by the appellant - filing ST-3 returns periodically in terms of Rule 7 of the Service Tax Rules, 1994 As per (SULEKHA BEEVI C.S.), MEMBER (JUDICIAL) HELD THAT - The facts have already been narrated in detail and it is found that the very same issue has been considered by the Tribunal in the appellant's own case for a different period in the case of M/S. VODAFONE CELLULAR LTD. VERSUS COMMISSIONER OF GS CENTRAL EXCISE COIMBATORE 2019 (3) TMI 617 - CESTAT CHENNAI wherein the Tribunal has analysed the very same issue for the periods from 01.04.2011 to 30.06.2012 and 01.10.2013 to 30.09.2014, where the demand was raised on international inbound roaming services and it was held that The services are not exigible to service tax being export of service. Thus, there are no reason to take a different view from the decision rendered in the case of M/s. Vodafone Cellular Ltd. Following the same, it is opined that the demand cannot sustain. As per (SANJIV SRIVASTAVA), MEMBER (TECHNICAL) HELD THAT - The international roamer while roaming outside is home network gets hooked to the network which is available and with whom the home network has made necessary agreement for providing the roaming services. Every time the international roamer makes the call he is calling the available network and all calls made by him are only routed through the available network in the place where he is located. In actual the calling facility is provided to the international roamer by the available network only and not by his home network. Thus the actual service recipient i.e. international roamer is getting the services from the available network. All the literature suggests that in the case of international roaming the Home Service Provider is only acting as the facilitator for getting the service provided through the available network in the place where the roamer is located through the network with whom he has agreement - The Home Network of roamer receives the details of the calls made by the roamer while roaming in the area where Vodafone network exists through clearing house mechanism, and also is billed for the provision of the service to the international roamer. Home network makes the payment to Vodafone as per the agreed tariff and in turn recovers it from his customer while raising the bill on him. The findings of the Commissioner in the impugned order in respect of the location of service provider and service recipient to be in accordance with the available technical literature on the subject and the same cannot be faulted with. In view of the above finding the question of law as to the services provided by the appellant to international roamer will be export of services or not needs to be considered - the issue needs to be reconsidered for the period in respect of the of the period post 01.07.2012 on the basis of the Place of Provision of Service Rules, 2012 and Education Guide 2012 issued explaining the said provision. The view of the Commissioner in the impugned order is concurred with to effect that benefit of export of services is not available in the present case - the decision in the Appellants own case referred to by the Learned Member (Judicial) a part of demand period is after 01.07.2012, and Tribunal has made observation for that period in para 5.2, which in my view is sub-silentio and hence cannot be a binding precedent. In view of the findings as above the appeal needs to be dismissed. Difference of opinion - HELD THAT - In view of the difference of opinion between the Members, the following questions are framed for resolution of the same, as under - (1) Whether the decision of the Tribunal in the appellant's own case on the same issue which covers the period from 01.04.2011 to 30.06.2012 and 01.10.2013 to 30.09.2014 M/S. VODAFONE CELLULAR LTD. VERSUS COMMISSIONER OF GS CENTRAL EXCISE COIMBATORE 2019 (3) TMI 617 - CESTAT CHENNAI has to be applied to this appeal which pertains to the period from July 2012 to September 2013 and the appeal has to be allowed, as held by the Member (Judicial)? OR (2) Whether the decision of the Tribunal in the appellant's own case is not a binding precedent for the reason that the observations made by the Tribunal in paragraph 5.2 of the said decision is sub silentio for the period after 01.07.2012 and the appeal has to be dismissed, as held by the Member (Technical)? As per Per Dr. D.M. MISRA, MEMBER (JUDICIAL) Whether, after notifying the POPS Rules, 2012, the FTO is no more to be considered as the service receiver and the person who visits India and beneficiary of the said roaming service becomes the service receiver? HELD THAT - In the present case, the legal relationship is between the appellant and the overseas FTO for provision of the service, when their(FTO's) subscriber visits India and uses the services during his stay in India. The consideration/payment for the service flows from the FTO to the appellant, for the said service, under an agreement, even though the beneficiary for such service is subscriber of the FTO. Thus, the FTO is the person who is legally entitled to receive the service as per the agreement, even though the beneficiary is the customer of FTO on their visit to India. Therefore, in my view, there is no change of status of the FTO, from service receiver to an Intermediary, post introduction of POPS Rules, 2012, when read in the context of the charging section 66B - In the present case, it is the agreement between the appellant and the FTO; hence any deficiency in the service provided by the appellant to the Customers' of FTO, can only be proceeded by the FTO and not the subscriber of the FTO, who is the beneficiary of the service during his visit to the taxable territory. Also, the subscriber of the FTO, cannot proceed against the Appellant for any deficiency, but only against the FTO with whom he has a valid agreement. Examining the issue from all angles, it cannot be said that the FTO is not the service receiver, but the visitors to India who use the service during their visit to India, are the service receiver. The opinion of the Ld. Member(J) agreed upon that the precedent in the Appellant's own case be followed and the Appeal deserves to be allowed. The matter be placed before the Division Bench for appropriate order accordingly. MAJORITY ORDER In view of the majority order, it is held that Tribunal's decision in the appellant's own case M/s. Vodafone Cellular Ltd. v. Commissioner of G.S.T and C.Ex. Coimbatore has to be applied and the appeal is allowed.

Summary

Issues Involved:
1. Whether international inbound roaming charges received by the appellant are subject to levy of Service Tax.
2. Whether the Tribunal's earlier decision in the appellant's own case is a binding precedent for the period post-01.07.2012.

Issue 1: Levy of Service Tax on International Inbound Roaming Charges

The appellant, Vodafone Idea Ltd., provided roaming services to international inbound roamers and received income from foreign network operators. The Department observed that these services were provided in India and consumed in the Indian taxable territory, thus liable to Service Tax. The appellant contended that these services qualify as 'export of services' under the Export of Services Rules, 2005, as they received income in foreign currency. A Show Cause Notice was issued, and the Original Authority confirmed the demand for Service Tax along with interest and penalties. The appellant argued that the services were provided to Foreign Telecommunication Operator Companies (FTOs) under International GSM Roaming Agreements, and the actual service recipient was the FTO, not the inbound roamer. The Tribunal had previously ruled in favor of the appellant, stating that the services amounted to export of service and were not exigible to Service Tax.

Issue 2: Binding Precedent of Tribunal's Earlier Decision

The Tribunal's earlier decision in the appellant's own case for the period from 01.04.2011 to 30.06.2012 and 01.10.2013 to 30.09.2014 held that the services amounted to export of service and were not subject to Service Tax. The Tribunal found no reason to deviate from this decision, concluding that the demand could not be sustained. However, the Member (Technical) dissented, arguing that the earlier decision did not adequately consider the provisions of the Place of Provision of Services Rules, 2012, which came into effect post-01.07.2012. The Member (Technical) opined that the service recipient was the inbound roamer located in India, making the services taxable. The Member (Judicial) disagreed, maintaining that the FTO was the service recipient under the legal agreement with the appellant, and thus the services were export services.

Majority Order:

The majority held that the Tribunal's earlier decision in the appellant's own case should be applied, and the appeal was allowed with consequential reliefs. The decision emphasized that the FTO was the service recipient, and the services provided amounted to export of services, thus not subject to Service Tax.