Order Date – 16 August 2023

Parties: M/s. Vodafone Idea Limited Vs The Commissioner of Central Excise & Service Tax

Facts – 

• The Appellant, M/s. Vodafone Idea Limited, is engaged in the provision of Telecommunication Services, Business Auxiliary Services, Intellectual Property Services, etc.
• A Show Cause Notice was issued for the period from July 2012 to September 2013 proposing to demand Service tax on the international inbound roaming charges received by the appellant observing that since these services were provided in India by the Indian service provider and consumed in the Indian taxable territory, such services are liable to tax.
• It was informed that they have received income in foreign currency for rendering such services and that the services rendered by them qualify as 'export of services

Issue –

• Whether international inbound roaming charges are subject to levy of Service Tax?

Order – 

• The Tribunal observed that in the present case the service recipient being located in India, the place of location of service recipient will be the place of provision of service, though the payment for the service received by the international roamer is made by his Home Network to service provider. Thus the service recipient in the present case is the person who receives the service and not the person who is making the payment for the service provided.
• When the facts in the present case indicate that both the service provider i.e. the appellant and the service recipient "international roamer" are located in the taxable territory, then by application of the Rule 8 of the Place of Provision of Service Rules, 2012, the location of the service recipient will be the place of provision of service.
• Hence the Tribunal concur with the view of the Commissioner in the impugned order to effect that benefit of export of services is not available in the present case. Accordingly, the appeal is to be dismissed.

Difference of Opinion

• In the present case, the legal relationship is between the appellant and the overseas FTO for provision of the service, when their (FTO's) subscriber visits India and uses the services during his stay in India. The consideration/payment for the service flows from the FTO to the appellant, for the said service, under an agreement, even though the beneficiary for such service is subscriber of the FTO.
• Therefore, there is no change of status of the FTO, from service receiver to an Intermediary, post introduction of POPS Rules,2012, when read in the context of the charging section 66B, but is the actual service receiver, as per the agreement between them and the Appellant, the service provider.
• Examining the issue from all angles, it cannot be said that the FTO is not the service receiver, but the visitors to India who use the service during their visit to India, are the service receiver. 

MAJORITY ORDER

• In view of above, the decision of the Tribunal in the appellant's own case on the same issue which covers the period from 01.04.2011 to 30.06.2012 and 01.10.2013 to 30.09.2014 [M/s. Vodafone Cellular Ltd. v. Commissioner of G.S.T. and C.Ex., Coimbatore - 2019 (25) G.S.T.L. 557 (Tribunal - Chennai)] has to be applied to this appeal and hence the appeal is allowed.