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2019 (3) TMI 1503 - AT - Service TaxTelecommunication Service - Service to oneself - inter unit adjustments - Interconnection Service to their own Landline segment - period 2007 to 2012 - demand of service tax - Held that:- The services provided by the appellants to their Landline segment, namely, Interconnect Usage Charges and the consequent collection of Interconnect Usage Charges, have been considered as taxable under the category of Telecommunication Charges defined in Section 65(109a) ibid. While the said definition is an expansive and detailed one, there is no definition of what are Interconnect Usage Charges - Interconnection Usage Charges would only be such charges levied by a service provider on another service provider. This interpretation is further reinforced by the fact that the said Regulations include the definitions of “Interconnection Provider” as a service provider to whose network interconnection is sought and “Interconnection Seeker” as a service provider who seeks such interconnection. The disputed services pertain to interconnectivity provided by M/s. BSNL, Cellular Mobile Telephone Services (CMTS) Division and M/s. BSNL, appellants herein to their own landline network. Surely, by no stretch of imagination can these two Divisions of M/s. BSNL be termed as two separate service providers for the purposes of the definitions contained in the aforesaid TRAI Regulations that we have just analyzed, etc. - In the present scenario, most, if not every, service provider extends a gamut of connectivity services like landline connectivity, connectivity on mobiles through GSM, CDMA connectivity, data and voice through optical fibre and so on. A service provider like M/s. BSNL may be providing one or more of these connectivities as may be subscribed to by their subscribers. But the important point to be noted is that when the CMTS Division of BSNL is providing interconnectivity to their Landline Division, the service provider BSNL is only providing service to itself. Thus, it becomes a case of service to oneself. The Tribunal in the case of Precot Mills Ltd. [2006 (2) TMI 25 - APPELLATE TRIBUNAL, BANGALORE] has held that when one renders service to oneself, there is no question of leviability of service tax; that there is no client-principal relationship in transactions and service tax is not leviable. Thus, the charges levied by one Division of M/s. BSNL to another and that too by way of debit notes, is only an internal financial adjustment which cannot, by any stretch of imagination, be termed as “Interconnection Usage Charges” or as a taxable service for the purpose of levying service tax - Appeal allowed - decided in favor of appellant.
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