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TMI Blog2022 (4) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... This data link/leased circuit of M/s. AT & T / Genysis allowed the appellants to access the servers located abroad for which specific amount was paid by the appellant periodically based on invoices issued. On this service, the demand was confirmed under the head of Telecommunication Service for the period from April 2007 to March 2011. 2.1 The agreement was entered into between HII and the appellant on 1.1.2007 effective from 1.4.2003 with an objective to secure the services of managerial and technical personnel to assist the appellant in its business. The terms and conditions stipulated in Assignment Agreement are summarily as follows: * The appellant shall request HII to provide employees who have the expertise required by HTSL. * In order to help HII make the selection, HTSL shall provide HII with a description of the qualifications required by HTSL. * Based on the list provided by HTSL, HII shall identify the people and select the employees. * The employees seconded to HTSL shall continue to be on payroll of HII only for the purpose of continuation of social security / retrial benefits and for all practical purposes, HTSL shall be the employer. 2.2 As per the above ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of the appellant. He also placed reliance on the following judgments: * M/s. Padmini Products Ltd. Vs. CCE: 1989 (43) ELT 195 (SC) * P & B Pharmaceuticals (P) Ltd. Vs. Collector of Central Excise: 2003 (153) ELT 14 (SC) 4. Shri P. Gopakumar, Learned Additional Commissioner (Authorised Representative) appearing on behalf of the Revenue reiterates the findings of the impugned order. 5. We have carefully considered the submissions made by both sides and perused the records. As facts narrated above, the demand was confirmed on Manpower Recruitment or Supply Agency Service and Telecommunication Service. As regards the demand on Manpower Recruitment or Supply Agency Service, in the appellant's own case, this Tribunal held that arrangement for availing the services of executive appointed in the appellant's company by the foreign vendor does not amount to Manpower Recruitment or Supply Agency Service. Accordingly, the demand was dropped. In the judgment reported at Honeywell Technology Solutions Lab Pvt. Ltd. (supra), it was passed the following order: "11. We find that similar issue arose before this Tribunal in the case of M/s. Volkswagen India (Pvt.) Ltd. V. CCE, Pune-I - 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case, the service provider is located outside India. He cannot be treated as Telegraph Authority as Telegraph Authority has to be recognised by an authority of law prevailing in India, therefore, service provider cannot be treated as Telegraph Authority. Accordingly, the condition of the definition is not satisfied. In the facts of the present case, service is provided by a foreign entity will not fall under the definition of 'Telecommunication Service'. Therefore, the appellant is not liable to pay service under Reverse Charge Mechanism. This identical issue has been considered by this Tribunal in the case of TCS E-Serve (supra) where it has been held as: "5.1 It will be useful to peruse the provisions of Sections 66 and 66A of the Finance Act at this juncture. The relevant portions of the said sections are extracted below :- "66. Charge of service tax. - There shall be levied a tax (hereinafter referred to as the service tax) at the rate of twelve per cent of the value of taxable services referred to in sub-clauses (a), ............. (zzzzv) and (zzzzw) of Clause (105) of Section 65 and collected in such manner as may be prescribed. 66A. Charge of Service Tax on serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice is specified in Clause (105) of Section 65. Even the notes on clauses to Finance Bill, 2006 which inserted Section 66A states that "sub-clause (c) seeks to insert Section 66A with a view to levy Service Tax on taxable services provided or to be provided from outside India and received in India.". In other words, if a service is not specified under Section 65(105), no Service Tax liability would arise whether under Section 66 or 66A. 5.3 Now let us see how the leased circuit services with which we are concerned has been defined in Section 65(105). Prior to 1-6-2007, the taxable service was defined as follows :- "(105) 'Taxable service' means any service provided or to be provided - (a) to (zc) ............... (zd) to a subscriber, by the telegraph authority in relation to a leased circuit." With effect from 1-6-2007, leased circuit services got merged into telecommunication service as defined and the taxable service under Section 65(105) read as follows :- "(zzzx) to any person, by the telegraph authority in relation to telecommunication service." In other words, for the leased circuit service to be taxable, it has to be provided by a 'telegraph authority'. As per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved from a foreign vendor. The argument of the department that this clarification is only an internal correspondence and not a circular and hence not binding on the department is childish, to say the least. 5.5 The decision of the Hon'ble High Court of Andhra Pradesh in the Karvy Consultants Ltd. case cited supra has relevance. The issue for decision in the said case related to levy of Service Tax on banking and financial transactions undertaken by the petitioner which was registered as an NBFC under the RBI Act, 1934 but whose principal business was not of receiving deposits/lending. The Hon'ble High Court held that to levy Service Tax, the service provider should be both a company and with principal business of receiving deposits/lending. Mere registration as an NBFC is not enough to bring the activity under the purview of Service Tax levy. Applying the ratio to the facts of the present case, it is not enough that the service provider provides the leased circuit services but it should be a 'telegraph authority' as defined in the Act. Unless both the conditions are cumulatively satisfied, service tax levy will not apply. 5.6 The reliance placed by the Revenue on the Unitech Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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