Service Tax
TRT-2025-
Cestat Kolkata
Date:-30-11-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 30 November 2023
Parties: M/s Vodafone Essar East Ltd. Vs Commissioner of Service Tax, Kolkata
Facts –
- The Appellant, M/s Vodafone Essar East Ltd., had entered into international roaming agreements with various foreign telecom operators (FTOs) for providing international roaming facilities to the subscribers of the appellant travelling to foreign countries.
- For providing these services, the FTO charges the Appellant at a rate as agreed between the parties as per the terms of the agreement. The Appellants pay the foreign telecom operators (FTOs) in foreign currency.
- A show cause notice dated 19.12.11 was issued alleging that the services received by the appellants have been received in India, thus the Appellant was liable to pay service tax on reverse charge mechanism as the recipient of services also covered under the category “business auxiliary services”.
Issue –
- Whether the international roaming services provided is liable to service tax under the category “business auxiliary services”?
Order –
- The Tribunal observed that the payment of roaming charges was made by the Appellant to FTOs for providing connectivity services to their subscribers when they are abroad. The services are appropriately classifiable as ‘Telecommunication Service’. During the relevant period, only telecommunication services provided by a 'Telegraph Authority' to a person was taxable.
- In the instant case, FTOs located abroad providing the connectivity services would not fall within the ambit of 'Telegraphy Authority' as defined under Section 65(111) of the Finance Act, 1994 read with Section 3(6) of the India Telegraph Act, 1885. Accordingly, the charges paid for the services rendered by the FTOs cannot be taxed under head “Business Auxiliary Service” on the Appellant.
- Hence it was held that the demand confirmed in the impugned order under the category of ‘Business Auxiliary Service’ on the Appellant is not sustainable. Since the demand is not sustainable consequently, demand of interest and penalty is also not sustainable. The appeal is allowed.
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