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TMI Blog2016 (1) TMI 823X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants. Held that:- From the explanation to the Rule 6 of POT Rules, it is clear that in the present case the same does not apply. This is because the provision of service is not determined periodically in terms of any contract, which requires service receivers to make any payment. As there is no such contract requiring service receiver to make any payment, the point of taxation is to be determined in terms of clause (a) of Rule 6. Under Rule 6(a), where a continuous supply of a notified service is provided under a contract, the determining point is date of issue of invoice. The fact remains that service was provided under a contract; the absence of consideration clause in the contracts does not come in the way of determining the point of taxation under Rule 6 (a). Undoubtedly therefore, in the present case the service is provided when the invoice is issued. Where invoices were not issued within fourteen days of the completion of the service, the point of taxation was to be the date of such completion. It is apparent that the point of taxation will be when the invoice for the service provided is issued. Date of Invoice versus date of demand letters issued by the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mination service between the operators began with effect from 01/04/2011. Although some operators agreed to pay for SMS termination service to the terminating telecom operators i.e. the appellant in this case, whereas following six operators did not sign any agreement with the appellant for payment of termination charges nor they paid any such charges for the termination services received from the appellants. i) Aircel Cellular Ltd. (Aircel Cellular) ii) Tata Teleservices Ltd., iii) Reliance Communicaitons Ltd. and Reliance Telecom Ltd., iv) Loop Mobile (India) Ltd., (Loop Mobile) v) Sistema Shyam Teleservices Ltd., (SSTL) vi) Mahanagar Telephone Nigam Ltd., (MTNL) Proceeding against the appellants were initiated for not paying service tax on the SMS termination services provided by them. Proceedings culminated in the impugned order confirming the demand of service tax of ₹ 4,28,05,261/- under Section 73 (1) of the Finance Act, 1994 along with interest under Section 75. The period of dispute is July 2011 to September 2012. The demand of service tax amounting to ₹ 76,21,255/- for the period April 2011 to June 2011 was dropped by the Commissioner for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Valuation Rules. He further contends that the demand letters issued by the appellant cannot be considered as invoice and referred to CBEC Circular No. 166/1/2013 dated 01/01/2013 in this regard. He also argues that if demand is found to be sustainable, they may be granted cum tax benefit. On limitation he refers to their to their letter dated 22/12/2010 addressed to the Directorate General of Central Excise Intelligence in which they had notified that the termination charges are not being charged. 5. The contention of the Ld. AR is that Rule 2(c) of the POT Rule categorises continuous supply of service in two categories. Under the second category, once a service, such as the service in question is notified, the point of taxation is governed by Rule 6 (as it stood during the relevant period). Rule 6 provides the point of taxation to be the time when the invoice is issued or if the invoice is not issued within fourteen days of the completion of the service, the point of taxation shall be the date of such completion. She argues that the demand letters clearly indicated that the appellant was charging for the services provided and all the particulars required in an invoice iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd part covers those cases of continuous supply of service where the Central Government by a notification prescribes a particular service to be a continuous supply of service . The telecommunication service has been notified as continuous supply of service under Notification No. 38/2012-ST dated 20/06/2012. We may now ascertain the Point of Taxation in the present case. Prior to 01/04/2012 the point of taxation was determined under Rule 6. For convenience, the Rule is re-produced below: 6. Determination of point of taxation in case of continuous supply of service; Not withstanding anything contained in rule 3, 4, or 8 in case of continuous supply of service, the point of taxation shall be - (a) the time when the invoice for the service provided or to be provided is issued; Provided that where the invoice is not issued within fourteen days of the completion of the provision of the service, the point of taxation shall be date of such completion (b) In a case, where the person providing the service, receives a payment before the time specified in clause (a) the time when he receives such payment to the extent of such payment. Explanation 1: For the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oing so on the basis of certificates/debit notes which gives all the details required in an invoice. We find that in terms of Rule 4A the following details are required in an invoice: i) the name, address and the registration number of such person; ii) the name and address of the person receiving taxable service; iii) description and value of taxable service provided or agreed to be provided and iv) the service tax payable thereon From the demand letters issued by the appellant to various telecom operators, we find that they contained all the details required in an invoice. The demand letters give the name and address of the service provider as well as the service receivers. The description and value of service provided is also mentioned by the appellant in the demand letter. As regards the service tax payable, we are of the view that once the value is known as well as the rate of tax, the actual amount of service tax payable becomes quite obvious. The demand letters complied with the substantive provisions of Rule 4A and therefore, may be considered as invoices. Formal invoices were not issued by the appellant because service receivers were not ready to enter into a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igned the Agreement nor paid the charges. Therefore, the appellant issued demand letters. It is clearly been brought out in para 23 of the impugned order that the appellant never declared the provision of service rendered or taxable value in the service tax returns filed with the department. Failure to fulfill this legal obligation cast on the service provider, is a case of suppression of facts especially when the appellant had raised demand letters on the service receivers quantifying the charges payable for the services rendered by the appellant. Learned Advocate relied on the Hon'ble High Court of Patna Judgement in the case of Aashirvad enterprises Pvt. Ltd. - 2013 (288) ELT 172 (Pat.). We have seen this judgement. The assessee in this case paid duty at 8% on PVC parts used for manufacture of pumps which were exempted, in terms of Rule 57 CC(1). It declared so in the invoices. But in terms of Rule 57 CC(4) (a), duty was required to be paid at 25%. In this context it was held that there was no deliberate act with intent to evade duty because the fact of paying duty in terms of Rule 57CC (1) was declared by the assessee. The facts in the present case are entirely different. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we find that the value has already been ascertained by the appellant. In the circumstances, Section 67 (1) (i) which says that value shall be the gross amount charged by the service provider, would be applicable. In the present case, the appellant has charged the service tax and quantified the same in the demand letters. In our view, invocation of wrong sub-clause for determination of value does not make the charge itself invalid. Reliance is placed on the Apex Court judgement in the case of JK Steel Ltd. Vs. UOI - 1978 (2) ELT J355 (SC) which held that if the exercise of a power can be traced to a legitimate source, the fact that the same was purported to have been exercised under a different power does not vitiate the exercise of the power in question. This is a well settled proposition of law. As the service provider has issued demand letters quantifying the SMS termination charges of ₹ 0.10 per SMS with effect from 01/04/2011 and equivalent charges have been paid by some other telecom operators, we find nothing wrong in taking the value as charged by the appellant in the demand letters which may be treated as an invoice. 7.5 Lastly the learned Advocate prayed that if d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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