2023 (10) TMI 432 - AT - Service Tax

Levy of Service Tax - Business Auxiliary Services - intermediary services - recipient of service provided by a FTO to a cellular / mobile subscriber of an HNO, during international roaming - activity of providing cellular / mobile services to a subscriber during international outbound roaming - HELD THAT - The issue of the service provider and the service recipient, has been examined by a Coordinate Bench of this Tribunal in M/s Vodafone Idea Limited 2023 (9) TMI 68 - CESTAT CHENNAI . It is found that though the issue in the said order pertained to inbound roaming services and the technical issues involved are similar - the majority order makes it clear that in the case of international inbound roaming the FTO is the person who is legally entitled to receive the service of the HNO as per the agreement, even though the beneficiary is the customer/ subscriber of FTO in the taxable territory. The order hence rejects the concept that during international roaming the subscriber of the home telecom operator is the service receiver. During international outbound roaming outside the taxable territory the HNO is the service recipient of the services provided by the FTO and not the HNO s subscribers/ customers. The averment of the appellant in this regard hence succeeds. The reliance placed by Revenue on the minority order and Board s Education Guide has been examined by the majority decision in the same judgment and has not found favour for reasons stated therein. Whether the activity undertaken / provided by the FTO to the HNO is exigible under RCM? - HELD THAT - The issue as to whether the appellant is liable to pay service tax under RCM on outbound roaming services received from the foreign telecom service provider under the category of telecommunication services was examined by a coordinate Bench of this Tribunal in Vodafone Essar Digilink 2017 (5) TMI 882 - CESTAT NEW DELHI - the Division Bench concluded that services provided by any person who is not a telegraph authority is not liable to discharge service tax either under section 66 or under section 66A of the Finance act 1994. Although the activity of providing cellular / mobile services to a subscriber during international outbound roaming relates to telecommunication service, however the said services provided by any person who is not a telegraph authority , as in the present case, the activity would not be a taxable service as defined by section 65(109a) and is hence not exigible to service tax at the hands of the appellant under RCM. Appeal allowed.

Summary

Issues Involved:
1. Identification of the service recipient during international outbound roaming.
2. Classification of the service provided during international outbound roaming.
3. Taxability of the activity at the hands of the appellant under Reverse Charge Mechanism (RCM).

Summary:

1. Identification of the Service Recipient:
The primary issue was to determine who the recipient of the service provided by a Foreign Telecommunication Operator (FTO) to a subscriber of a Home Network Operator (HNO) during international outbound roaming is. The Tribunal held that during international outbound roaming, the HNO (appellant) is the service recipient of the services provided by the FTO, and not the HNO's subscribers/customers. This conclusion was based on the legal relationship and payment obligations defined in the agreement between the HNO and the FTO, as established in previous judgments such as M/s Vodafone Idea Limited.

2. Classification of the Service:
The Tribunal examined whether the activity of providing cellular/mobile services to a subscriber during international outbound roaming falls under 'Business Auxiliary Service' (BAS) as claimed by Revenue or 'Telecommunication Services' (TCS) as averred by the appellant. It was determined that the activity relates to TCS as defined by section 65(109a) of the Finance Act, 1994. The Tribunal referenced previous judgments, including Vodafone Cellular Ltd, which clarified that the same activity cannot be taxed under a different heading for the same period.

3. Taxability Under RCM:
The Tribunal addressed whether the appellant is liable to pay service tax under RCM on outbound roaming services received from the FTO. It was concluded that although the activity of providing cellular/mobile services during international outbound roaming relates to telecommunication service, the services provided by any person who is not a 'telegraph authority' are not taxable as defined by section 65(109a) of the Finance Act, 1994. Therefore, the activity is not exigible to service tax at the hands of the appellant under RCM, in line with the judicial discipline and previous rulings such as Vodafone Essar Digilink.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal and granting the appellant consequential relief as per law. The decision was pronounced in open court on 10.10.2023.