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M/s. Vodafone Essar Digilink Ltd. Versus C.C.E. Jaipur-I

Reverse charge mechanism - Telecommunication services - outbound roaming services received from the foreign telecom service provider - whether the services provided by the overseas service provider is conforming to the telecommunication services defined under sub clause (zzzx) of section 65(105) ibid? - Held that: - in order to fall under the taxable category, service provider must be a Telegraph Authority - in order to be considered as Telegraph Authority, the person has to be granted a license .....

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y person who is not a Telegraph Authority, is not liable to service tax either u/s 66 or u/s 66A ibid. - Demand set aside - appeal allowed - decided in favor of assessee. - ST/371/2011-CU(DB) - FINAL ORDER NO. 56465/2016-CU(DB) - Dated:- 30-11-2016 - Shri S.K. Mohanty, Member (Judicial) and Shri V. Padmanabhan, Member (Technical) Shri Manish Gaur, Advocate for the Applicants Shri Ranjan Khanna, DR for the Respondent ORDER Per S.K. Mohanty: This appeal is directed against the impugned order d .....

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he appellant on the ground that it is liable to pay service tax, under reverse charge mechanism, on the outbound roaming services received from the foreign telecom service provider under the category of Telecommunication services . Thus show cause notice issued in this regard was adjudicated vide order dated 05.02.2010 wherein demand of service tax of ₹ 10,46,360/- was confirmed along with interest and penalties under section 78 and 76 of the Finance Act 1994. In appeal against the adjudic .....

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efined under clause (zzzx) of section 65(105) of the Finance Act 1994. Thus he submits that since the service is not conforming to the taxable service falling as above, the demand of service tax under section 66A cannot be confirmed against the appellant in the capacity of recipient of such services. He further submits that since the services were not provided by the overseas service provider in the capacity of Telegraph Authority , the said service is outside the scope and ambit of telecom serv .....

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he records. 8. The short question involved in this appeal for consideration by the Tribunal is whether the services provided by the overseas service provider is conforming to the telecommunication services defined under sub clause (zzzx) of section 65(105) ibid. 9. On perusal of the statutory provision it is seen that in order to fall under the taxable category, service provider must be a Telegraph Authority. The term Telegraph Authority‟ has been defined under clause 111 of section 65 ibi .....

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his case the Foreign Service provider has not been granted with any licenses under the Indian Telegraph Act 1885 and hence cannot be considered as a Telegraph Authority under the provisions of the Indian Telegraph Act 1885. 11. Analyzing the true scope and ambit of the definition of Telegraph Authority the CBEC vide circular dated 15.07.2011 has clarified as below: The matter has been examined. The activities are in the nature of leased circuit services presently covered under Telecommunication .....

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ed abroad, he is not covered under the definition given in section 65(109a). Thus the service provided by foreign vendors cannot be taxed under telecommunication service. 12. Further, this Tribunal in the case of TCS E-Serve Ltd., by relying on the circular dated 15.07.2011 has held that services provided by any person who is not a Telegraph Authority, is not liable to service tax either under section 66 or under section 66 A ibid. The relevant paras of the said decision are extracted here below .....

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d the taxable service under Section 65(105) read as follows :- (zzzx) to any person, by the telegraph authority in relation to telecommunication service. In other words, for the leased circuit service to be taxable, it has to be provided by a telegraph authority‟. As per Section 65(111), Telegraph authority has the meaning assigned to it in Clause (6) of Section 3 of the Indian Telegraph Act, 1885 and includes a person who has been granted a licence under the first proviso to sub-section ( .....

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from the said letter are extracted verbatim below :- Sub : Sections 65(104c), 65(105)(zzzq), 65(111), 66A, Rule 2(1)(d)(iv) - Taxability in respect of International Private Leased Circuit (IPCL) charges and amendment in the definition of Telegraph authority u/s 65(111) of the Finance Act, 1994 - reg. Representations have been received seeking clarification regarding taxability of IPCL charges incurred in foreign currency by BPO/MNCs against receipt of services from the service provider situated .....

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