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TMI Blog2018 (3) TMI 1007X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of payment to PCO operator was changed by providing a slab basis / defined rates. Thus for Re.1 collected by PCO operator, he retained Re.0.30 and Re.0.40 and paid Re.0.70 and Re.0.60 to BSNL upon which BSNL discharged the service tax. According to department, Re.0.30 and Re.0.40 in the nature of discount given to PCO operator should be included for levy of service tax. In Bharti Infotel Ltd. [2005 (7) TMI 3 - CESTAT, New Delhi], it was decided that such commission / discount cannot be included in the value for levy of service tax. N/N. 2/2011-ST dt.1.3.2011 has inserted an Explanation in Rule 5, clause (1) of Service Tax (Determination of Value) Rules, 2006, which says that W.e.f. 1.3.2011, the value of taxable services in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal No.ST/376/2012, Ld. Consultant Shri R.Balagopal appeared. 3. The brief facts of the case are that the assessee, BSNL is registered with the service tax department as providers of Telecommunication Services. The assessee provides telecommunication service to the subscribers / customers who have obtained telephone connection and to public customers / callers by an arrangement of Public Call Office (PCO). The PCOs are maintained by persons called PCO operators appointed by BSNL for this purpose. Prior to 1.6.2008, the call from PCOs was charged uniformly at the rate of Re.1 per Metered Call Unit (MCU) i.e per minute with a 60 seconds pulse. The charge of Re.1 per MCU consisted of three components viz. Revenue share for the BSNL, commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts which were confirmed by the Commissioner who also imposed penalty under Section 78 and dropped proposal to impose penalty under Section 76 against which appeals ST/376/2012 ST/388/2012 and ST/389/2012 have been filed. In respect of Tirunelveli unit, the order passed by original authority was appealed before Commissioner (Appeals) who dropped the demand, interest and penalties. Hence department appeal No.ST/40024/2014. The details of appeals, SCN, period involved is shown in the table below : S. No Appeal No. SCN No. date Period OIO/OIA 1. ST/376/2012 (assessee appeal-Madurai) 1/2011 dt. 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . After 1.6.2007, the word to a subscriber was substituted by the word to any person . Counsel submitted that the main question that arises for determination in these appeals is whether BSNL is liable to pay service tax on the entire amount realized by the PCO operators from their customers. The said issue is decided in the case of Bharti Infotel Ltd. Vs CCE Bhopal - 2006 (1) STR 107 (Tri.-Del.). The Commissioner (Appeals) has followed the said decision and set aside the demand. The department contends that decision in Bharti Infotel Ltd.(supra) is not applicable for the period post 1.6.2007. He argued that the amendment has nothing to do with the issue under consideration or the ratio laid down in the these decisions. The assessee is prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs in the original order as well as the grounds stated in the appeals filed by the department. He submitted that the period involved is after 1.6.2008 which is post-amendment. The PCO operator is only a franchise of BSNL and telecommunication service is provided to the ultimate consumer / caller / user of the PCO. Therefore, the assessee-BSNL is liable to pay service tax on the entire amount that is collected from the user of the PCO. He submits that the decision in the case of Bharti Infotel Ltd. (supra) is not applicable to the case, as Bharati Infotel was related to the period prior to the amendment. 8. Heard both sides. The dispute is whether the assessee has to discharge service tax on the entire amount collected by the PCO operator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to BSNL upon which BSNL discharged the service tax. According to department, Re.0.30 and Re.0.40 in the nature of discount given to PCO operator should be included for levy of service tax. 8.3 In Bharti Infotel Ltd. (supra), it was decided that such commission / discount cannot be included in the value for levy of service tax. The said decision was followed by Tribunal in BSNL, Bijapur, Karnataka reported in 2014-TIOL-3033-CESTAT-Bang. 8.4 The argument of the Ld.AR, that after the amendment to Sec.65 (105) (zzzx) the said decision will not apply is countered by the counsel for appellant by relying on Notification No.2/2011. 9. The Notification No.2/2011-ST dt.1.3.2011 has inserted an Explanation in Rule 5, clause (1) of Service Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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