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2018 (4) TMI 725

t like news, ring tone, games, SMS, alerts etc. to telecom operators who provided it to the subscribers - whether taxable under the support of business and commerce for the period 01.05.2006 to 31.05.2007? - Held that: - similar issue decided in the case of THE STATE OF ANDHRA PRADESH Versus M/s BHARAT SANCHAR NIGAM LTD, HYDERABAD [2011 (9) TMI 216 - Andhra Pradesh High Court], where it was held that “Value added services” fall within the ambit of “telecommunication services” as defined in Section 2(k) of the TRAI Act and Section 65(109a) of the Finance Act, 1994. Ringtones, music downloads, wall paper, music clips etc., fall within the definition of “development and supply of content” under Section 65(36c) and constitute “taxable service” under Section 65(105) (zzzb) of the Finance Act, 1994. - Pre-existing entry continue to remain with the same scope and words even after the introduction of the new tax entry, thereby revealing that the new tax entry is an altogether new addition to the taxing scope - the tax liability under BSS is not sustainable for development and supply of contents to the telecom operators. - MMR and management consultancy service - reverse charge mech .....

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cting audit of the accounts maintained by the appellant, the Revenue entertained a view that the appellants did not discharge service tax under various categories for the period from 01.10.2003 to 31.03.2008. After collecting various details from the appellant, proceedings were initiate d against them to demand and recover service tax not paid by them. The original authority after hearing the appellant adjudicated the case. He confirmed service tax liabilities under various headings for different periods. The total liability confirmed is ₹ 1,40,45,132/ - along with penalties under various Sections of Finance Act, 1994. 2. The Id. Consultant appearing for the appellant submitted that there are 4 different issues involved with the service tax demand confirmed by the lower authority. The first issue is with reference to supply of content like news, ring tone, games, SMS, alerts etc. to telecom operators who provided it to the subscribers. The Revenue held a view that the said service is liable to be taxed under the support of business and commerce for the period 01.05.2006 to 31.05.2007. Ld. Consultant submitted that the said service was more specifically covered under the categ .....

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strongly contended against the demand on the ground of revenue neutrality stating that even the tax was to have been paid, the full credit of such tax is available to the appellant for discharging their tax liability on output services in India. On that ground relying on the decision of Jet Airways India Ltd. - 2016 (44) STR 465 (Tri. - Mum.) (re a d with rectification order), the Id. Consultant pleaded that there is no loss to the Government and no tax liability that too involved in extended period can be confirmed against the appellant. 6. The Id. Consultant also contested the demands wherever involving extended period and also imposition of penalties on the ground that the issues involved as discussed above are all with reference to interpretation of statute and also considering the eligibility of the appellant for credit of such tax payment, no malafide can be attributed. 7. The Id. AR contested the appeal stating that the contents provided by the appellant to the telecom operators is clearly supporting the business of such operators. The Original Authority examined the defence submitted by the appellant regarding the tax liability under a new tax entry as well as under the old .....

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ntended in his handset. The mobile handset is both a transmitter and a receiver. Information transmitted/received by a mobile phone, be it audio or visual, is only by means of electro - magnetic waves. VAS involves only a transfer of data (textual, audio, visual etc.) and/or accessibility (ability to access) of such data or content in the network of the service provider. Value added services fall within the ambit of telecommunication services as defined in Section 2(k) of the TRAI Act and Section 65(109a) of the Finance Act, 1994. Ringtones, music downloads, wall paper, music clips etc., fall within the definition of development and supply of content under Section 65(36c) and constitute taxable service under Section 65(105) (zzzb) of the Finance Act, 1994. 10. Regarding the contention of the Id. AR that the services could still be taxed under BSS for the period prior to the introduction of a new tax entry, we note that BSS did not under go any statutory change during the relevant time, when new tax entry was introduced for development and supply of content under Section 65 (36)(c) of the Finance Act, 1994. The Tribunal in Diebold Systems (supra) held that introduction of a new entr .....

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nt. Though, the explanation to BSS gives only inclusive definition of infrastructure support, examining the present context of the support received by the appellant by way of server hosting, we are of the considered view that the same will fall under the overall category of infrastructural support service, which is part of the BSS. Regarding the contention of the appellant that they need not pay service tax as the situation is revenue neutral, we note that the question of revenue neutrality as a legal principle to hold against a tax liability is not tenable. In other words, no assessee can take a plea that no tax need have been paid as the same is available to them as a credit. This will be against the very basic canon of value added taxation. The revenue neutrality can at best be pleaded as principle for invoking bonafideness of the appellant against the demand for extended period as well as for penalty which require ingredients of malafide. Reliance was placed by the Id. Consultant regarding the submission on revenue neutrality, on the decision of the Tribunal in Jet Airways (supra). We have noted that in the said decision the Tribunal recorded as admitted facts that the appellan .....

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