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M/s Vodafone Essar Gujarat Ltd, M/s Vodafone West Ltd Versus Commissioner of Service Tax, Ahmedabad

2015 (10) TMI 367 - CESTAT AHMEDABAD

Refund / Rebate under Rule 5 of Export Service Rules, 2005 - Period of limitation - Activity of providing Telecommunication service to their customers/clients of Foreign Telecom Operator (FTO) - According to the Revenue, the Appellants rendered the Telecommunication services to the inland customers of FTO in India and therefore, such service cannot be treated as export of service. - Held that:- appellant should be eligible for refund of the service tax paid on input services used in or in relati .....

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ndatory requirement of law. In view of that, we find that the decision of the Tribunal in the case of Vodafone Cellular Ltd [2014 (3) TMI 117 - CESTAT MUMBAI] applicable in the present case.

In view of the above discussion and following the decision of the Tribunal in the Appellant's own case, we allow all the appeal and the matter is remanded to the Adjudicating authority for verification as to whether the claims are time barred or not - We make it clear that the principle of unjust .....

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are that the Appellants are engaged in the business of providing Telecommunication service and registered with Service Tax authorities for payment of Service Tax. The Appellants filed rebate claims under Rule 5 of Export Service Rules, 2005 in respect of Service Tax paid by them. The Appellants raised the Bills to their customers/clients of Foreign Telecom Operator (FTO) for service to inland customers who visited to India and received amount from FTO in respect of such bills in foreign currenc .....

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n case Vodafone Essar Cellular Ltd Vs CCE Pune-II - 2013 (31) STR 738 (Tri-Mumbai) held in favour of the Appellant. Subsequently, in the case of Vodafone Cellular Ltd Vs CCE Pune-III - 2014 (34) STR 890 (Tri-Mum) , the Tribunal, following the earlier decision, allowed the rebate claim on merit, but it has held against the Appellant on limitation. He relied upon the following decisions:- a) Vodafone Essar Cellular Ltd Vs CCE, Pune-III 2013 (31) STR 738 (Tri-Mum) b) Vodafone Cellular Ltd Vs CCE, P .....

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ubmits that the Notification No.11/2005-ST, dt.19.04.2005 does not indicate any limitation and therefore, no limitation would be applicable in respect of the rebate claims. He relied on the decision of the Hon'ble Gujarat High Court in the case of CCE Vs Swagat Synthetics - 2008 (232) ELT 413 (Guj) . The learned Advocate filed a compilation of case laws and the relevant rules and circulars. 5. The learned Authorised Representative on behalf of the Revenue submits that the Tribunal while pass .....

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subject of nature or location of any service, the criteria for taxing event of service tax. It is an essential activity while determining the nature of location. In the present case, the taxing event is in India, as the Appellant rendered the service directly to the International Inbound Roamer (IIR) and when the IIR leaves in India, the service is concluded. He categorically submits that in the present case, there is no need for devising any test, since it is not in dispute that the activity wh .....

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129 (Tri-Mum) . The reliance on the international standards, which follows the General Agreement on Trade and Tariff (GATT). The GATT formulation may have persuasive value and they do not form part of interpretative criterion. It is submitted that the Tribunal while deciding the case of Vodafone Essar Cellular Ltd (supra), heavily relied upon the decision of the Tribunal in the case of Paul Ltd Merchants Ltd Vs CCE Chandigarh -2012-TIOL-1877-CESTAT-Del. The decision of the Tribunal in the case .....

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ase, the IIR was paying charges to the Appellant through the FTO. It is a case of payment of money to the Appellant through the FTO, cannot change the character of the service of the Appellant to the IIR directly. In the case of Paul Merchant Ltd (supra), there was a principle to principle that present relationship existed between Western Union and Paul Merchant Ltd and Paul Merchant Ltd was, inter alia, providing the service of delivering the money and also undertaking promotion and marketing o .....

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nd the Indian Telecom Operator is not licenced to render service to FTO under the Indian Telegraph Act, 1885.. In the case of Vodafone Essar Cellular Ltd (supra), the Tribunal heavily relied upon the CircularNo.111/05/2009/ST, dt.24.02.2009. He submits that the Board circular had clarified in different perspective, the benefit accrued outside India and then it will be treated as export. He relied upon the subsequent circular of the Board No.141/10/2011-TRU, dt.11.05.2011 that clarifies the situa .....

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records, we find that the Adjudicating authority rejected the rebate claim on merit as well as partly barred by limitation. There is no dispute on the facts of the case that the Appellants raised to Bills to FTO as per agreement for rendering telecommunication service to the International Inbound Roamer registered with FTO. The learned Authorised Representative for the Revenue had fairly submitted that the facts in the appellant's own case is Vodafone Essar Cellular Ltd (supra) and the prese .....

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provide telecom services to the customer of the foreign telecom service provider while he is in India using the appellant's telecom net work. The consideration for the service rendered is paid by the foreign service provider. There is no contract/agreement between the appellant and the subscriber of the foreign telecom service provider to provide any service. Since the contract for supply of service is between the appellant and foreign telecom service provider who pays for the services rend .....

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e the payment, as far as the florist is concerned you are the customer and not your friend. 5.2 Export of Service Rules, 2005 defines export in respect of taxable services. For this purpose, the services have been categorized into 3. Category I deals with specified services provided in relation to an immovable property situated in India. Category II deals with specified taxable services where such taxable service is partly performed outside India and states that when it is partly performed outsi .....

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satisfied are such services as are provided from India and used outside India; and consideration for the service rendered is received in convertible foreign exchange. As observed earlier, the service is rendered to a foreign telecom service provider who is located outside India and therefore, the transaction constitutes export and we hold accordingly. 5.3 The Board's clarification vide Circular No.111/5/2009-S.T., dated 24-2-2009 makes this position very clear. Para 3 of the Circular which .....

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ct prepares a design sitting in India for a property located in U.K. and hands it over to the owner of such property having his business and residence in India, it would have to be presumed that service has been used outside India. Similarly, if an Indian event manager (a category II service [Rule 3(1)(ii)]) arranges a seminar for an Indian company in U.K., the service has to be treated have been used outside India because the place of performance is U.K. even though the benefit of such a semina .....

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dia so long as the benefits of these services accrue outside India." Thus what emerges from the above circular is that when the appellant rendered the telecom service in the context of international roaming, the benefit accrued to the foreign telecom service provider who is located outside India since the foreign telecom service provider could bill his subscriber for the services rendered. This is the practice followed in India also. When an Indian subscriber to, say, MTNL/BSNL goes abroad .....

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beneficiary on behalf of the customer of Western Union in foreign country, whether the services rendered by the Indian Agents/Sub-agents should be treated as export or not under Export of Service Rules, 2005. By a majority decision, it was held that "the service being provided by the agents and sub-agents is delivery of money to the intended beneficiaries of the customers of Western Union abroad and this service is 'business auxiliary service', being provided to Western Union. It i .....

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n of the Tribunal in the case of Paul Merchant Ltd (supra). The main contention of the learned Authorised Representative that the Tribunal had not considered the decision of Hon'ble Supreme Court in the case of All India Federation of Tax Practitioners (supra). He heavily relied upon the principle of "equivalence" as referred by the Apex Court in the case of All India Federation of Tax Practitioners (supra). It is also argued that the Hon'ble Supreme Court observed that it is a .....

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, had discussed in detail in respect of principle of "equivalence" and the destination based consumption tax. In that case, the learned 3rd Member had observed as under:- "(ii) The principle of equivalence between the taxation of goods and taxation of service had been laid down by the Apex Court in the case of Association of Leasing & Financial Service Companies v. Union of India (supra) and All India Federation of Tax Practitioners v. Union of India (supra) in the context of .....

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scussed in this order, the Export of Services Rules, 2005 are in accordance with the Apex Court's ruling in the above-mentioned judgments that Service Tax is a value added tax, which in turn is a destination based consumption tax in the sense that it is levied on commercial activities, and it is not a charge on the business but a charge on the consumers. There is nothing in Export of Services Rules, 2005 which can be said to be contrary to the principle that a service not consumed in India i .....

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still pending. The submission of the learned Authorised Representative that the Tribunal had not considered the decision of the Hon'ble Supreme Court in the case of All India Federation of Tax Practitioners (supra), is not correct. We do not find any force in the submission of the learned Authorised Representative that the illustration made by the Tribunal in the case of Vodafone Essar Cellular Ltd (supra) would not be appropriate. In any event, the judgment cannot be distinguished merely o .....

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se Act, 1944, which deals with refund of excise duties has been made applicable to Service Tax vide Section 83 of the Finance Act, 1994. This would imply that the time-limit of one year from the date of payment of tax for filing of the refund claim would apply in respect of Service Tax refunds also. Even if it is argued that there is no specific time-limit set out in Notification 11/2005-S.T., it is a settled position in law that though the law is silent on the time-limit applicable, a reasonabl .....

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