TMI Blog2019 (12) TMI 556X X X X Extracts X X X X X X X X Extracts X X X X ..... he exchange systems throughout the states. Clearly, in terms of the Indian Telephone Rules, 1951, this cannot be called a local call and a phone used for such calls cannot be called as telephone meant for local calls only. Further, mobile networks also do not form part of the exchange system in the aforesaid definition. Therefore, calls made to mobile networks also cannot be called as local calls. In the absence of any contrary definition of local calls anywhere, we have no choice but to hold that the appellant is not entitled to the benefit of exemption notification which was available for public telephones to be used for local calls - on merits the demand is sustainable. Extended period of limitation - HELD THAT:- From the SCN, the intention to evade payment of service tax is not very evident. No doubt the appellant has wrongly availed exemption notification 03/94 (ST) in respect of these services and as the department dealing with the telephones, the appellant should have known better than anybody else what local calls are. They should also have known that they have enlarged the scope of the public telephones to make calls to mobiles and to the entire state of Andhra Prade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S. No. Specified Taxable Services (1) (2) 1. Personal Accident Social Security and Hut Insurance Scheme. 2. Comprehensive Crop Insurance Scheme. 3. Cattle Insurance under Integrated Rural Development Programme. 4. Scheme for Insurance of Tribals. 5. Janata Personal Accident Policy and Gramin Accident Policy. 6. Group Personal Accident Policy for Self-Employed Women. 7. Agricultural Pumpset and Failed Well Insurance. 8. Premia collected on insurance of export of goods from India and export credit insurance. 9. Premium received from Re-Insurance both domestic and overseas. 10. All business for which premium is booked outside India. 11. Small t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... departmentally run or guaranteed public telephones run by vendors. It was, therefore, alleged in the show cause notices that the appellants have not discharged their service tax liability as required under Section 66 of the Finance Act, 1994 and had suppressed the fact that these services were being used to enable customers to make calls to mobile phones and to lines throughout the state of Andhra Pradesh. Accordingly, the demands were raised invoking extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994 along with interest under Section 75. It was also proposed to impose penalties under Section 76, 77 78 of the Finance Act, 1994. Accordingly, the present appeals have been filed. 4. On a specific query from the bench, learned counsel for the appellant submits that for the subsequent period they have been paying service tax on these services and the dispute is only for the relevant period. 5. The appeal of the appellant is on the following grounds: 1) The National Telecom Policy, 1994 formulated by the Government of India intended to extend the facility of telephones to every nook and corner of the country. Accordingly, many public telepho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o long distance calls. By suppressing these facts the appellant had evaded payment of service tax and therefore, extended period of limitation was correctly invoked. In fact, the appellant themselves have started paying service tax with effect from 01.06.2006 on the basis of a circular issued by their own department on exactly the same services. Therefore, the appeals filed by the appellant are liable to be rejected. 7. We have considered the arguments on both sides and perused the records. The issues which fall for consideration are as follows. 1) Whether the appellant is entitled to the benefit of exemption notification 03/94 (ST) dt.30.06.1994 (Sl.No.12 13) which is available to only telephones used for local calls, in respect of those telephones which were used for long distance calls as well as calls to mobile phones. 2) Whether the demand invoking extended period of limitation is sustainable. 3) Whether penalties can be imposed upon the appellant. 8. As far as first issue is concerned, exemption notification makes it clear that it is available only for departmentally run telephones meant for local calls as well as guaranteed public telephones operating only f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCN, the intention to evade payment of service tax is not very evident. No doubt the appellant has wrongly availed exemption notification 03/94 (ST) in respect of these services and as the department dealing with the telephones, the appellant should have known better than anybody else what local calls are. They should also have known that they have enlarged the scope of the public telephones to make calls to mobiles and to the entire state of Andhra Pradesh. They should have paid duty on these services and they have failed to do so. However, the intention to positively suppress this information and evade service tax is not evident from the SCNs or from the impugned order. Therefore, we find that the revenue has not established the case to invoke extended period of limitation. We have no doubt, the appellant were extremely careless in not paying service tax on the disputed services but we are unable to accept that there is a positive effort to suppress the facts or an intention to evade payment of service tax. For the same reasons, we find that the penalty under Section 78 imposed upon the appellant is also not sustainable. In view of the above, we find that the demands, if any, wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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