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TMI Blog2010 (12) TMI 1269X X X X Extracts X X X X X X X X Extracts X X X X ..... ded by the respondents are governed by the provisions of the Indian Telegraphs Act, 1885 and Rules framed thereunder i.e. the Indian Telegraph Rules, 1951. The petitioner by this petition challenge the charging of service tax on bi-monthly rental bills. The petitioner is a subscriber under Own Your Telephone scheme. According to the petitioner, the present bi-monthly rentals for the said telephone is ₹ 340/-. As per the Finance Act, 1994 service tax at the rate of 5 per cent of the value of the taxable service is chargeable. The case of the petitioner is that the petitioner is liable to pay service tax on the amount of bi-monthly rental i.e. ₹ 340/- whereas the respondents are charging service tax calculating the rentals at S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hly rental, the respondents are entitled to claim service tax on the amount of ₹ 380/- which is the amount of bi-monthly rental. 3. It is an admitted position that the telephone facility which is installed at petitioner s residence is Own Your Telephone [Scheme]. The Circular issued by the Telegraph Department defines Own Your Telephone scheme which reads as under : 1.4 OYT (Own Your Telephones) Scheme. - This is a Scheme under which an applicant makes an advance lump sum payment in the form of advance payment of part of the rent for certain number of years. The subscriber gets a rebate and is liable to pay less rent than normal rent fixed by the Department. Indian Telegraph Rules also defines Own Your Telephone Scheme in Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- ₹ 5000 (b) Initial period during which a reduction in rental is admissible 20 yrs. 20 yrs. 20 yrs. (c) Rebate in rental : (i) On rentals paid annually ₹ 384 ₹ 288 ₹ 240 (ii) On rentals paid bi-monthly ₹ 64 ₹ 48 ₹ 40 (iii) On rental paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apter, the value of taxable services, - (a) in relation to service provided by a stock-broker, shall be the aggregate of the commission or brokerage charged by him on the sale or purchase of securities from the investors and includes the commission or brokerage paid by the stock-broker to any sub-broker; (b) in relation to telephone connection provided to the subscribers, shall be the gross total amount (including adjustments made by the telegraph authority from any deposits made by the subscribers at the time of application for telephone connections) received by the telegraph authority from the subscribers. 7. Perusal of Section 67(b) shows that valuation of taxable service in relation to telephone connection is the gross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear that the initial payment made by the subscriber is not a deposit. It is a payment of rentals which entitles him to specified reduction in the annual rentals payable by him for a specified period. The amount of reduction and the period is governed by Rule 434 Section IV of the Indian Telegraph Rules quoted above. It lays down that if the initial payment is ₹ 5,000/- then the reduction of rentals is for 20 years at the rate of ₹ 40/- on rentals payable bi-monthly. In our opinion, therefore the petitioner is right in contending that for the purpose of charging service tax, ₹ 340/- is the amount of bi-monthly rentals and not ₹ 380/-. 9. In the result, therefore, Petition succeeds and is allowed. Rule made absolute ..... X X X X Extracts X X X X X X X X Extracts X X X X
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