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2018 (3) TMI 1007 - AT - Service TaxValuation - inclusion of amount of discount given to PCO operators - whether the assessee has to discharge service tax on the entire amount collected by the PCO operator from the PCO user (customer)? - Held that: - Prior to 1.6.2008, the appellant BSNL was discharging service tax on the basis of metered calls of the PCO recorded in the exchange. Thus PCO operators were allowed to charge Re.1 per MCU and this Re.1 comprised of Re.0.11 towards service tax and balance ₹ 0.89 towards commission payable to operators and revenue share of BSNL. After 1.6.2008, though Re.1 per MCU remained the same, 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 sub-clause (zzzx) of clause 105 of Section 65 namely the telecommunication services, shall be the gross amount paid by the person / PCO user to whom the telecom service is provided by the telegraph authority. The said amendment makes it clear that w.e.f. 1.3.2011, the value of taxable service would include the total amount collected by the PCO operator - since it is specifically stated that the said notification shall be effective only from 1.3.2011, the period involved in the present case being prior to 1.3.2011, the demand of differential amount of service tax alleging that entire amount collected by the PCO operator is subject to levy of service tax cannot sustain. Appeal allowed - decided in favor of assessee.
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