Service Tax not leviable on surcharge collected on delayed payment of telephone bill - Service Tax - 32/03/2000

Service Tax not leviable on surcharge collected on delayed payment of telephone bill Service Tax Circular No. 32/3/2000-CX Dated 20-12-2000 I am directed to say that it has been brought to the notice of the Board that divergent practices exist in respect of levy of service tax on `surcharge' collected for delayed payment of telephone bills. 2. The matter has been carefully examined by the Board. As per the provisions of Section 65(48)(b) of Chapter V of the Finance Act, 1994, service tax is leviable on the service provided by the telegraph authority to a subscriber, in relation to a telephone connection. Further, under Section 67(b) of the said Finance Act, the value of taxable services has been defined to include only the amount charged for the services provided by the Telegraph authority to a subscriber. On a harmonious interpretation of the above provisions and also taking note of the fact that the amount of surcharge on delayed payment of a telephone bill does not alter the value of taxable services, it is hereby clarified that service tax is not leviable on the amount of surcharge collected for delayed payment of telephone bills. Consequently, Board's Service Tax Circular No. 29/3/99, dated 15-7-1999 [See 1999 (112) E.L.T. - T29] (issued from file F. No. 149/5/97-CX. 4) which is contrary to the above position stands withdrawn. 3. It is desired by the Board that pending disputes, if any, be finalised as per the instructions contained herein. Trade and field formations may also be informed suitably. Receipt of this circular may kindly be acknowledged.