2021 (8) TMI 230 - Commissioner - GST

Refund of erroneous tax paid - tax paid inadvertently to the government exchequer - Section 54 of CGST Act, 2017 - Exemption from GST - leasing and renting services with or without operator as per Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 - License Fee (LF) for issuance of license and Spectrum Usage Charges (SUC) for use of spectrum - issuance of license and allotment of spectrum as a Regulatory fee - LF and SUC charges are consideration for supply or not - License fee and Spectrum usage charges paid by the Appellant are covered in Service Rate Notification or not - non-speaking order. Whether payment, in the form of License Fee (LF) for issuance of license and Spectrum Usage Charges (SUC) for use of spectrum, as a percentage of the Adjusted Gross Revenue (AGR) to Department of Telecommunications (DoT) is a Supply under GST law or not? - HELD THAT - It is implied that the rendering of service from the Government (DoT) to business entities, (in the instant case the appellant ) established from the aforesaid statutory provision. Therefore, the levy of GST is appropriately applicable on the appellant as per sub-section (3) of Section 9 of the CGST Act, 2017 read with Notification No. 13/2017-Central Tax (Rate), dated 28 June, 2017 - Further, if there was any doubt regarding 'taxability of service then the appellant was free to approach the Authority for Advance Ruling (AAR) as per clause (e) of sub-section (2) of Section 97 of CGST Act, 2017, because question of law about determination of the liability to pay tax on any service may be sought for advance ruling to AAR as per GST law, but the same was not opted by the appellant. Whether issuance of license and allotment of spectrum as a Regulatory fee attract any levy of tax as per GST law? - HELD THAT - If no GST is leviable on grant of license then why a service category at HSN Head 9973 38 as Licensing services for right to use other natural resources including telecommunication spectrum has been specified in the GST Act. Thus, it can be concluded that such type of services License Services for right to use other natural resources including Teleservices Spectrum are not regulatory fee and are taxable as per GST law under the specific Head 9973 38 meant for such services. Whether LF and SUC charges are consideration for supply as per GST law or not? - HELD THAT - On consideration in the form of LF and SUC paid by the appellant to the Government is consideration as per clause (31) of Section 2 of CGST Act, 2017 which cover all the elements specified under ibid section of the Act. There are service provider as well as service recipient and the element of consideration is also involved in the instant case. Hence, the taxability is fasten on these payments as per GST Act. Whether License fee and Spectrum usage charges paid by the Appellant are covered in Service Rate Notification and are leviable to tax or not? - HELD THAT - The fact to be appreciated is that the rate amendments carried out vide Notification No. 27/2018-Central Tax (Rate), dated 31-12-2018 is nothing but to clarify the legislative intent as well as to resolve the unintended interpretations. Hence, the rate of tax specified vide Notification No. 27/2018-Central Tax (Rate), dated 31-12-2018 is very much applicable to the disputed period and as such the prevalent rate, at which appellant has paid, found in order. Whether impugned order is non-speaking order? - HELD THAT - Licensing services for right to use other natural resources including telecommunication spectrum is specified in HSN sub-heading 9973 38, whereby taxability of said service has been fastened as per Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017. Since, taxability of service in question has been specified in the Act, then it cannot be interpreted that it will not be taxed and refund will be issued for the GST, payment in this regard. There are no infirmity in rejection of the refund - appeal dismissed.

Issues Involved:
1. Whether payment in the form of License Fee (LF) for issuance of license and Spectrum Usage Charges (SUC) for use of spectrum is a 'Supply' under GST law.
2. Whether issuance of license and allotment of spectrum as a 'Regulatory fee' attract any levy of tax as per GST law.
3. Whether LF and SUC charges are 'consideration' for supply as per GST law.
4. Whether License fee and Spectrum usage charges paid by the Appellant are covered in Service Rate Notification and are leviable to tax.
5. Whether the impugned order is a non-speaking order.

Detailed Analysis:

Issue 1: Whether LF and SUC are 'Supply' under GST law
The judgment refers to Section 2(83) and Section 7 of the CGST Act, 2017, which define 'outward supply' and 'supply' respectively, including terms like sale, transfer, barter, exchange, licence, rental, lease, or disposal. The term 'licence' is explicitly covered under these sections. Additionally, Entry No. 62 of Notification No. 25/2012-S.T., dated 20-5-2012, and Circular No. 192/02/2016-Service Tax, dated 13-4-2016, clarify that services provided by the government for telecom services or spectrum usage are taxable. Thus, the judgment concludes that LF and SUC are indeed a 'Supply' under GST law.

Issue 2: Whether LF and SUC as a 'Regulatory fee' attract GST
The judgment dismisses the appellant's argument that LF and SUC are regulatory fees, pointing out that these charges are a percentage of Adjusted Gross Revenue (AGR) and fluctuate based on revenue, thus directly linked to business activities. The judgment cites Section 4 of the Telegraph Act, which grants the government exclusive rights to establish, maintain, and work telegraphs, and permits licensing for a fee. Therefore, the judgment concludes that LF and SUC are not regulatory fees but taxable services under HSN Head 9973 38.

Issue 3: Whether LF and SUC are 'consideration' for supply
The judgment refers to clause (31) of Section 2 of the CGST Act, defining 'consideration' as any payment made for the inducement of supply of goods or services. It further cites Section 4 of the Indian Telegraph Act, 1885, which allows the government to grant licenses for a fee. The judgment explains that LF and SUC are part of the revenue-sharing model between telecom operators and the government, thus constituting 'consideration' under GST law. Therefore, LF and SUC are taxable as per the GST Act.

Issue 4: Whether LF and SUC are covered in Service Rate Notification and are leviable to tax
The judgment examines the Tax Invoice and finds that the appellant has paid GST under HSN Head 9973 for 'Leasing or rental services with or without operator.' It refers to Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017, which specifies the rate of GST for services under HSN sub-heading 9973 38. The judgment also discusses the amendments brought by Notification No. 27/2018-Central Tax (Rate), dated 31-12-2018, clarifying the GST rate applicable to licensing services for the right to use other natural resources, including telecommunication spectrum. Therefore, the judgment concludes that LF and SUC are covered under the Service Rate Notification and are taxable.

Issue 5: Whether the impugned order is a non-speaking order
The judgment agrees with the appellant that the impugned order is non-speaking but asserts that the taxability of 'Licensing services for right to use other natural resources including telecommunication spectrum' is clearly specified in HSN sub-heading 9973 38. The judgment finds no merit in the appellant's argument for refund, as the taxability is established by the statutory provisions. Therefore, the judgment dismisses the appeal, finding no infirmity in the rejection of the refund.

Conclusion
The appeals are dismissed, and the rejection of the refund claims is upheld. The judgment comprehensively addresses each issue, concluding that LF and SUC are taxable under GST law, are not regulatory fees, constitute 'consideration' for supply, are covered under the Service Rate Notification, and the impugned order, although non-speaking, does not warrant a refund.

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