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2015 (9) TMI 733 - CESTAT NEW DELHI

2015 (9) TMI 733 - CESTAT NEW DELHI - 2015 (40) S.T.R. 1131 (Tri. - Del.) - Leased circuit service - leasing of dark fibre cables - telegraph authority. - leasing of space on microwave towers - Business Auxiliary service - Penalty u/s 78 - Held that:- Leasing of tower space does not fit under any limb of the definition of Business Auxiliary Service quoted above. The adjudicating authority’s observation that lease of tower space also promotes the service provided by the cellular telephone operato .....

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various cellular operators is not sustainable. - Decided in favor of assessee.

Leased circuit service - The appellant has conceded that it has been granted a licence under Section 4(1) of Indian Telegraph Act, 1885). So it is clearly a telegraph authority as defined under Section 65(111) of Finance Act, 1994. It thus becomes clear that the dedicated dark fibre cable link was provided to a subscriber by a telegraph authority and therefore all the requirements of Section 65(105))(zd) ( .....

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hat the service rendered did not fall under leased circuit service because there was no scope of any confusion or ambiguity in that regard. Further, the appellant did not timely provide the information sought and had to be issued repeated reminders. Therefore we are of the view that the appellant is guilty of suppression of fact and therefore the extended period has rightly been invoked and mandatory penalty is clearly imposable. - Decided against the assessee. - Appeal No. ST/668/2009-CU(DB) - .....

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also imposed. The said demand has been confirmed under two services : (i) Leased circuit service Section 65(60)/(105)(zd) of the Finance Act, 1994 - ₹ 1,01,82,467/-. (ii) Business Auxiliary service 65(19) /(105)(zzb) ibid - ₹ 74,27,181/-. The adjudicating authority has held that the appellant had leased dark fibre cables but did not pay service tax under the leased circuit service. Similarly, it leased towers space on its microwave towers for installation of equipment of various cell .....

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g thereto. 2. The appellant has contended that: (i) It was not leasing any circuit as telegraph authority. (ii) The circuit was not leased to any subscriber but was given to other telegraph operators and therefore it was not covered under the scope of Section 65(105)(zd) ibid. (iii) What was leased was dark fibre or unlit fibre which is an unused optical fibre. It explained that dark fibre exists because most of the cost of installing cables is in the civil engineering work and therefore additio .....

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ce, it is stated that it was leasing tower space to other telecom service providers and this service was not covered under Business Auxiliary Service. (vii) With effect from 1.6.2007 they are paying service tax on tower lease charges under telecommunication service. (viii) There was no wilful mis-statement or suppression of facts on its part. 3. The ld. DR on the other hand stated that the services are covered under the respective (two) taxable services and the extended period is invokable becau .....

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he equipments of various Cellular Telephone Operators, M/s Rail Tel are realizing their service charge for lease of tower space from their clients.They are helping in promotion or marketing of service provided by their clients, i.e. the Cellular Telephone Operators, M/s Rail Tel are providing maintenance for the tower and when the tower space is leased out, it include the part of the maintenance cost. This could not be held as renting of commercial property. Thus, leasing of tower space is suppl .....

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assified under Business Auxiliary Service.Thus, it is clear that M/s Rail Tel were providing service of providing tower space to Cellular Telephone Operators which was taxable under the category Business Auxiliary Service prior to 1.6.2007 It is evident from finding of the adjudication authority that it does not dispute that the Service tax with effect from 1.6.2007 on the amount received for leasing of tower space is being remitted by the appellant under tele communication service. It, however, .....

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ocurement of goods or services, which are inputs for the client; or (Explanation: for the removal of doubts, it is hereby declared that for the purposes of this sub-clause inputs means all goods or services intended for use by the client;) (v) production or processing of goods for, or on behalf of the client; or (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection o .....

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on that lease of tower space also promotes the service provided by the cellular telephone operator is not based on any sound logic or rationale. Further there is nothing in the Finance Act, 1994 to even suggest that there was a transplant of any part of BAS into telecom service with effect from 1.6.2007 which by implication means that the service was not taxable under Business Auxiliary Service prior to 1.6.2007. Thus we are of the view that the demand of ₹ 74,27,181/- confirmed under Busi .....

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a telegraph circuit. Subscriber is defined under Section 65(104) ibid is as under : Subscriber means a person to whom any service of a telephone connection or a facsimile (FAX) or a leased circuit or a pager or a telegraph or a telex has been provided by the telegraph authority. Thus, it is evident that any person to whom the service of leased circuit is rendered gets covered under the scope of definition of subscriber provided such service is rendered by telegraphic authority. Telegraph author .....

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