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2016 (1) TMI 823 - AT - Service TaxTaxability of SMS termination service rendered by the appellant to other telecom operators - whether under the Point of Taxation Rules, 2011 service tax is payable on the SMS termination service rendered by the appellant to other telecom operators with whom neither a contract for service has been signed nor any consideration has been received. - SMS termination charges are payable by the originating telecom operators to the terminating telecom operator for the service provided by the terminating telecom operator. The termination charges are governed by the guidelines issued by the Telecom Regulatory Authority of India (TRAI). The actual charge of SMS termination service between the operators began with effect from 01/04/2011. Although some operators agreed to pay for SMS termination service to the terminating telecom operators i.e. the appellant in this case, whereas six operators did not sign any agreement with the appellant for payment of termination charges nor they paid any such charges for the termination services received from the appellants. Held that:- From the explanation to the Rule 6 of POT Rules, it is clear that in the present case the same does not apply. This is because the provision of service is not determined periodically in terms of any contract, which requires service receivers to make any payment. As there is no such contract requiring service receiver to make any payment, the point of taxation is to be determined in terms of clause (a) of Rule 6. Under Rule 6(a), where a continuous supply of a notified service is provided under a contract, the determining point is date of issue of invoice. The fact remains that service was provided under a contract; the absence of consideration clause in the contracts does not come in the way of determining the point of taxation under Rule 6 (a). Undoubtedly therefore, in the present case the service is provided when the invoice is issued. Where invoices were not issued within fourteen days of the completion of the service, the point of taxation was to be the date of such completion. It is apparent that the point of taxation will be when the invoice for the service provided is issued. Date of Invoice versus date of demand letters issued by the appellants - Held that:- The demand letters complied with the substantive provisions of Rule 4A and therefore, may be considered as invoices. Formal invoices were not issued by the appellant because service receivers were not ready to enter into a contract with the appellant even though they were receiving service continuously from the appellant. Therefore, we hold that service tax is payable by the appellant on the basis of the demand letters. Extended period of limitation - Held that:- The appellant issued demand letters. It is clearly been brought out in para 23 of the impugned order that the appellant never declared the provision of service rendered or taxable value in the service tax returns filed with the department. Failure to fulfill this legal obligation cast on the service provider, is a case of suppression of facts especially when the appellant had raised demand letters on the service receivers quantifying the charges payable for the services rendered by the appellant. Demand of service tax confirmed invoking extended period of limitation - Decided against the assessee.
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