TMI Blog2019 (7) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... 994 requires that to constitute a service, the activity carried out by a person for another should be for consideration - In the present case, the telecom service providers in question declined to enter into agreements providing for charging of consideration for the interconnection usage for SMS and no amount was charged and paid for the interconnection usage for SMS. Issuance of invoice - Applicability of POT Rules - HELD THAT:- The issuance of an Invoice pre-supposes and requires the existence of an agreement/ contract between the parties under which the parties have agreed upon a consideration/ charge/ price for a sale or service. An Invoice is a commercial document issued for debiting the recipient of goods/ service with the agreed price. This, in the first place, requires the existence of an agreed price. When there is no contract/ agreement, as in the present case and hence no price/ consideration is agreed upon, the question of issuing an Invoice for the same does not arise - Since there was no issue of Invoice, the point of taxation under Rule 3(a) of the Point of Taxation Rules, 2011, has not occurred - Since the point of taxation has not occurred under any of the claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Telecommunication Interconnection Usage Charges Regulations were amended with effect from 9th March 2009 and by the said amendment it was provided that Interconnection usage charge for SMS would be under forbearance (i.e. would not be fixed by TRAI) and it would be left to be arrived at by agreement between the telecom service providers in a manner which is Transparent, reciprocal and non-discriminatory . 5. After the said Regulations were so amended, the Appellant was able to arrive at agreements with the following telecom service providers as regards the interconnection usage charges for SMS, and the Appellant paid service tax on such agreed charges: - Bharti Airtel Limited - Idea Cellular Limited - Unitech Wireless and - Videocon Telecommunications Ltd. In terms of the agreements with the aforesaid Telecom service providers, the Appellant raised Invoices for the agreed Interconnection usage charges for SMS and discharged service in respect of such charges. 6. However, apart from the aforesaid Telecom service providers, no agreement with regard to the interconnection usage charges for SM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DGCEI recorded statements of the Appellant s Deputy General Manager (Jasroop Sandhu), Associate Vice President (Amitabh Khemka) and Executive Vice president (Rohit Agarwal), all of whom have in their statements maintained that no agreement/ contract was arrived at and executed with the said 6 Telecom service providers and that in absence of any agreement as to the consideration, the interconnection usage was provided to those 6 Telecom operators without any consideration, and it was for this reason that in respect of the Interconnection usage for SMS provided by the Appellant to them, no service tax was paid during the said period April 2011 to September 2012. 12. A Show cause notice dated 31-3-2014 was thereafter issued to the Appellant demanding service tax of ₹ 1,85,40,232/- for the period April 2011 to September 2012 by invoking the extended period of limitation. 13. After considering the Appellant s reply dated 2-7-2014, the Commissioner of Central Excise, Jaipur has passed the impugned Order dated 5-3-2015, confirming the demand for service tax with interest and imposing penalty as aforesaid. 14. It is the Appellant s submission th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad addressed various letters to the said 6 Telecom operators calling upon them to enter into agreement/contract specifying the consideration/ charge of 10 paise per SMS and to pay the same to the Appellant. According to the department, the said letters addressed by the Appellant amount to issue of Invoices, and hence the Point of taxation had occurred in accordance with Rule 3(a) of the said Rules. Reliance is placed by the department in this behalf on the decision of the Tribunal in the case of Vodafone Cellular Ltd., vs. CCE 2016 (42) STR 1048 . 18. In the aforesaid background, the primary issue which arises for consideration is whether in the absence of any consideration/ charges having been agreed upon between the Appellant and the said 6 Telecom operators and without any such consideration/ amount being charged by the Appellant for the interconnection usage for SMS, there was any taxable service rendered by the Appellant for disputed period. 19. It is not in dispute that in the statements recorded by the DGCEI, of the Appellant s Deputy General Manager (Jasroop Sandhu), Associate Vice President (Amitabh Khemka) and Executive Vice president (Rohit A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether in the absence of their being consideration on account of absence of agreement between the parties as to the amount to be charged and admittedly when no amount was charged and paid, was not raised and accordingly the Tribunal did not have occasion to consider and decide the said issue. The said decision therefore, cannot be a precedent on that issue. 23. Further, the issue whether in the absence of there being an agreed price, there can be issuance of any Invoice was also not raised before the Tribunal in the said decision in Vodafone Cellular Ltd., vs. CCE 2016 (42) STR 1048 . It would be evident from the following material relied upon by the Appellant that an Invoice is a commercial document issued for debiting the recipient of goods/ service with the agreed price: a) Wikipedia: as per which an invoice is a commercial document issued by a seller to a buyer, relating to a sale transaction and indicating the products, quantities and agreed prices for products or services the seller had provided to the buyer, b) https://www.thebalancesmb.com/what-is-invoice-398303: As per this an Invoice is a document sent by a provider of a product or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice. 26. Accordingly, in the present case, the completion of service would occur on the happening of the periodical event specified in the contract, when the receiver of service is required to make any payment to the service provider. In the present case there is no contract providing for payment to be made by the service receiver to the Appellant on the happening of a periodical event. Thus the completion of service as contemplated by the Rules has not occurred and therefore point of taxation has not occurred even in terms of the Proviso to Rule 3(a). 27. Rule 3(b) of the Point of Taxation Rules 2011, provides that where the service provider receives a payment before the time specified in Rule 3(a), the point of taxation occurs when he receives the payment. Admittedly, the Appellant has not received payment and hence the point of taxation has not occurred even under Rule 3(b). 28. Since the point of taxation has not occurred under any of the clauses of the said Rule 3, the liability to pay service tax has not arisen. 29. If in the future, the issue between the Appellant and the said 6 Telecom operators about the charges stands ..... X X X X Extracts X X X X X X X X Extracts X X X X
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