Application of service tax to pager service and Cellular telephones-clarification-reg.. - Service Tax - 07/01/96

This Circular has been rescinded by Circular No. 93/4/2007-ST, Dated: May 10, 2007 SERVICE TAX CIRCULAR NO 7/1/96 DATED 29-02-1996 Application of service tax to pager service and Cellular telephones-clarification-reg. 1. I have been directed to say that certain doubts have been expressed by the field formations regarding application of Service Tax to "Pager Services" and "Cellular Telephones". 2. The matter has been examined at length. The Board has taken note of the meaning assigned to 'Taxable Service' appearing in Sections 65 and 66 of Chapter V of the Finance Act, 1994, (herein after referred to as the Service Tax Act, 1994) which provides for 'Taxable Service' to mean, " inter alia ", any service provided to a subscriber by the Telegraphic authority in relation to a telephone connection". Telegraph Authority as defined under Section 65(17) of Chapter V of the Finance Act, 1994 has the meaning assigned to it in clause(6) of Section 3 of the Indian Telegraph Act, 1885 and includes a person who has been granted a licence under the first proviso to sub-section 4 of the Indian Telegraph Act, 1885. 3. The expression 'Telegraph' has been defined under Section 3(1) of Indian Telegraph Act, 1885 as any appliance, instrument, material or apparatus used or capable of use for transmission or reception of sign, signal, writing, images and sounds or intelligence of any nature by wire, visual or other electro magnetic emission, radio waves or Hertz in waves, galvanic, electric or magnetic means. "Telegraph is thus an all-encompassing term, a genus of the species telephone, telex, fax, wireless etc. In other words, it includes all and every equipment/apparatus which is capable of transmitting or receiving communication of any kind and would include a Pager Service". However, out of these modes of communications, the telephone alone had been brought within the ambit of the Service Tax Act, 1994. Sub-section 16(b) of Section 65 of Service Tax Act, 1994 specifically mentions the term Telephone Connection. A telephone is an item of telecommunication apparatus capable when connected to the applicable system, of transmitting and receiving uninterrupted simultaneous two way speech conveyed, or as the case may be, to be conveyed by means of that system. As distinguished from a telephone, the paging system is a non-speech on-way personal selective calling system with alert with defined massages such has numeric or alphanumeric messages. A pager obviously fall under the definition of 'Telegraph' as defined under Section 3(1) of the Indian Telegraph Act, 1885, but is not the same as telephone since there is no conversion of acoustic signals to electric signals and vice-versa and no two-way speech communication. It is, therefore, clarified that 'Pager Services' shall not fall within the purview of the Service Tax Act, 1994 as these services are not in relation to a telephone connection. 4. Cellular Telephone Services shall on the other hand fall within the purview of Service Tax Act, 1994 as the Cellular Telephone Companies are licensed under the first proviso of sub-section( 1) of Section 4 of the Indian Telegraph Act, 1885 and provides services to subscribers in relation to a telephone connection. The field formations may be informed accordingly.