2006 (1) TMI 31 - AT - Service Tax

Service Tax - Radio paging service - Value - Reconnection fee, and Wireless processing charges fee for providing continuous paging services to the customers to be included in the taxable value for the purpose of service tax

Summary

Issues:
1. Whether certain charges should be included in the taxable value for the purpose of service tax payment.
2. Whether the service rendered under "Radio Paging Services" category is subject to service tax.

Analysis:
1. The appeal was filed challenging the Order-in-Appeal regarding charges like registration fees, reconnection fee, and wireless processing charges. The Commissioner (Appeals) examined the case records and submissions. It was noted that reconnection charges are essential for activating the pager, similar to a SIM card for mobile phones. The Commissioner emphasized that WPC charges, although paid to DOT, are ultimately collected from customers for continuous paging services. Referring to Section 67 for valuation of taxable services, it was concluded that service tax is applicable on the gross amount charged from subscribers. The Commissioner found no merit in the appeal.

2. The Commissioner considered the issue of whether the service provided under "Radio Paging Services" falls under taxable services for service tax. The Commissioner observed that the Kerala High Court judgment in a similar case concluded that services like selling SIM cards and activation are taxable services. Despite no representation from the appellants, the Commissioner relied on the Kerala High Court judgment and the fact that WPC charges are collected from customers. Consequently, the Commissioner rejected the appeal, following the precedent set by the Kerala High Court judgment.

In conclusion, the Commissioner upheld the Order-in-Appeal, stating that the charges in question should be included in the taxable value for service tax payment. Additionally, it was determined that the service provided under "Radio Paging Services" category is subject to service tax based on the Kerala High Court judgment. The appeal was rejected, and the decision was pronounced in open court.