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2019 (8) TMI 324

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..... is payable by the appellant on the rental of wireless/ router or radio. Demand of service tax - rental/ lease charges (Interconnectivity Charges), charged by the appellant from other ISP for the rent/ lease of its optical fibre cables - HELD THAT:- It is a service provided by one Telegraph authority to another - Service Tax under the provisions of lease circuit service or telecommunication service is exigible only when service is provided by a Telegraph authority to a subscriber. This has also been clarified by the CBEC vide Circular No. B/11/1/2001-TRU - no service tax payable. Online Information and Database Access or Retrieval Services - amounts received by the appellant for the sale of domain names to various customers - HELD THAT:- Demand of Interest and penalties - HELD THAT:- The transaction in domain name is a transaction in property in the goods and amounts to transaction of sale of goods - Domain name are akin to trade mark, making them the property of the person who owns it - service tax not attracted. Appeal allowed - decided in favor of appellant. - Service Tax Appeal No. 60204 of 2013 - FINALORDER NO. 50975/2019 - Dated:- 5-8-2019 - MR. ANIL CHOUDHAR .....

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..... Description Category of service SCN dt. 8.2.2008 (period 1.1.2002-13.12.2007) SCN dt. 19.04.11 (period 1.1.2008-31.03.11) SCN dt. 24.12.2012 (period 1.4.2011-31.03.2012) Total Under LCS for foreign remittance made Leased Circuit Service/ Telecommunication service 11277193 23836092 0 35113285 Under LCS for wireless radio rental Leased Circuit Service (Section 65(105)(zd)/ Telecommunication service (Section 65 (109a) 581890 1316954 9854 1908698 Under LCS for lease of fiber cable Leased Circuit Service (Section 65(105)(zd) Telecommunication service 844800 .....

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..... services. Therefore, ld. Commissioner has held that the foreign remittances are taxable at the hands of the appellant for the period post the introduction of Section 66A (w.e.f. 18.04.2006) of the Act. Hence, ld. Commissioner has dropped the demand on this count for the period prior to 18.04.2006. (ii) That wireless routers/radios are used to provide a link between two different locations, for use by a customer for transmission of data/speech through internet. It was held, that without these routers, a customer will not have access to the Appellant s network. Consequently, it was held that the leasing of wireless router/radio would be taxable under leased circuit/telecommunication services. (iii) That the leasing of optical fibre/duct to other ISPs, also tantamount to leased circuit/telecommunication services because these ducts provide link for availing telecommunication services. It has been held that these fibres act as a bridge, that provides connectivity between two points. (iv) That the domain names are tools to reach another person through a computer network. It is a dedicated link between two different locations to transmit data and in .....

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..... authority . Thus, on strict construction of the provisions of the Act, FLAG Atlantic and REACH cannot be said to have provided leased circuit services to the Appellant. In this regard, the Appellant relies upon the following circulars and judicial decisions: a . Circular F. No. 137/21/2011-ST dated 15.07.2011 which provides that a foreign telecom service provider cannot constitute a telegraph authority in India and therefore cannot provide leased circuit/telecommunication services in India; b. Vodafone Essar Mobile vs.CST, 2017 (9) TMI 359-CESTAT New Delhi c. TCS-Serve Ltd. vs. CST, 2014 (33) STR 641 (Tri-Mum) d. Infosys Ltd. vs. CST, 2014 TIOL 409 (Tri-Bang) 11. As regards demand on the rental charges charged by the appellant from its customers towards the rent of its wireless routers/ radio, under the category of leased circuit service/ telecommunication services the learned Counsel submits- 11.1 The Appellant has entered into an agreement with various Indian Customers wherein it provides wireless routers on rent. The routers remain under the possession and control of the customers during the .....

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..... urther, judicial decisions have also held that a telegraph authority cannot be construed as a subscriber , for the levy of service tax under the category of leased circuit services. The following decisions are relied upon: a. Fascel Ltd. v. CST 2007 (7) STR 299 (Tri-Bang.); b. Power Grid Corporation of India Ltd vs. CST 2011 (24) STR 307 (Tri-del.) c. Reliance Telecom Ltd. v. CST 2007 (7) STR 595 (Tri-Ahmd.) 13. As regards the demand of service tax on the amount received by the appellant for the sale of domain name to various customers, it is urged- The last category relates to demand of service tax on sale of domain name by the Appellant to Indian customers, in return for a consideration. The said demand has been confirmed under the category of computer network services or online information and database access or retrieval service ( OIDAR ). It is submitted that this demand is not sustainable for the following reasons: i. The first SCN issued to the Appellant on 08.02.2008 proposes the recovery of demand under computer network services , which is not a category of service provided under the .....

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..... fficient transmission of data. 15.1 The exclusion clause in the definition of telecommunication service provide for exclusion of any service provided by any person in relation to internet telecommunication service referred to in clause (zzzu) of Section 65(105). The phrase internet telecommunication in the exclusion clause was earlier internet telephony till 16.05.2008, when the word telephony was replaced with the word telecommunication . Lease circuit means a dedicated link provided between two fixed location for use of the subscriber and includes a speed circuit, data circuit or telegraph circuit. The data circuit can be both wired or wireless. 15.2 So far the demand on the rental charges received by the appellant under agreement titled radio set up and maintenance agreement falls under deemed sale, transfer of right to use or under LCS / TCS. The essential / dominant character of the wireless router agreement evidences that appellant is engaged in the business of providing internet services. Their clients have executed an agreement with them to avail internet bandwith through radio connectivity and have requested them to install radio at its sit .....

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..... ntext of the old definition of leased circuit service. Hence, the case law is not relevant to the portion of demand made for the period 01.06.2007 to 31.03.2012. Since the party has not taken any ground other than the above case laws to challenge the demand for this transaction, the demand may be sustained for the period 01.06.2007 to 31.03.2012. 15.5. Further, the argument of the appellant that by virtue of exclusion clause in definition of telecommunication service, no internet related activity can be classified as telecommunication service. He submits that telecommunication service includes data transmission services under sub-clause (vii) of Section 65(109a) includes the provision of access to wire or wireless facilities and service specifically designed for efficient transmission of data. The exclusion clause only covers internet telecommunication which was earlier internet telephony as defined under Section 65(105) (zzzu). Thus, what is exempt is only internet telephony, not other services. 15.6 So far the demand with respect to sale of domain name is concerned, a domain name is required to give an address to a website on the internet, as no data tra .....

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