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TMI Blog2020 (2) TMI 1070X X X X Extracts X X X X X X X X Extracts X X X X ..... of the service provided by them to other internet service providers for carrying their internet traffic on their own backbone. It is further been provided that the appellant have raised an invoice on M/s. NIXI (National Internet Exchange of India) on 9.10.2013, for an amount of Rs. 7,44,19,477/- however, no service tax has been paid on the same by the appellant. A show cause notice dated 18.10.2013 was issued to the appellant whereunder a service tax amounting to Rs. 70,93,529/- has been demanded as per the provisions of sub-section (1) of Section 73 of Finance Act, 1994 by invoking the extended time proviso. The show cause notice also invokes the provisions of demanding interest under section 75 and penalty under section 76, section 77 and section 78 of Finance Act, 1994. The matter has since been adjudicated by Order-in-Original No. 14/Commissioner/2015 dated 27.08.2015 in which the Service Tax demand of Rs. 70,93,529/- has been confirmed invoking the extended time proviso of Section 73 of the Finance Act, 1994 read with section 66 and 68 of the Finance Act, 1994 and interest as applicable under section 75 has also been confirmed. Penalty of equal amount as also been imposed as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and access of having been received by other ISP Companies came much later. The learned Advocate has relied upon the decision of this Tribunal in the case of M/s. UP State Sugar& Cane Dev Corpn. Ltd. vs CCE 2009 (242 ELT 260 (Tri-Del) wherein this Tribunal has held that "since the appellant is a public sector undertaking of the Government of Uttar Pradesh, the allegation of mis-statement, or suppression of facts with an intent to evade payment of duty does not make any sense. It is inconceivable that the sugar mills owned by State Government would try to evade payment of duty by resorting to willful mis-statement of facts, more so when the duty paid was to be reimbursed to them by the Government. It has further been added that while exercise undertaken by the Department is merely on academic importance as the whole issue is otherwise revenue neutral. The learned advocate has also cited the following decisions to support his arguments in this regard. i) CCE vs. Coca Cola India Pvt Ltd. [2007 (213) ELT 490 SC]; ii) CCE vs Narayan Polyplast [2005 (10) SCC 121]; iii) CCE vs Gujarat Glass Pvt Ltd. [2013 (290) ELT 538 (Guj)]; iv) Rochem Separation Systems (I) Pvt Ltd. [2015 (39) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the above definition of taxable service under the category of Internet Telecommunication Service qua the admitted facts make it very clear that the service provided by the appellant in the form of 'pearing arrangement' is squarely covered by the above mentioned definition under section 65(57(a) of the Finance Act, 1994. The appellant has not denied this very fact. We find that the appellant have issued an invoice on M/s. NIXI on 09.10.2013 after initiation of investigation by the DGCEI. It has been the contention of the appellant all along that amount of Rs. 7,44,19,477/- for which the invoice has been issued to M/s. NIXI also includes service tax element of Rs. 70,93,529/-. Thus in a way, the appellant had admitted their service tax liability on the services provided to other ISP companies through M/s. NIXI in the form of pearing arrangement. The only contention of the appellant is that since they have not received any payment against the pearing services or against the invoice dated 09.10.2013 and therefore, legally they are not bound to pay any service tax on the same. We find that the arguments undertaken by the appellant is not sustainable in the light of legal provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts with an intent to evade the service tax need to be present. In this case, we find that before the investigations were initiated by the investigating agency, there have not been any settlement of services provided between various ISP (Internet Service Providers) for credit or debit of the account on behalf of each other. It is only after the investigation have started that the invoice dated 10.09.2013 was issued by the appellant on M/s. NIXI which is a intermediate agency working as a facilitator for uninterrupted services of internet in the Country. We find that there is no mens area present in withholding any information from the Department with regard to the 'pearing services' provided to the appellant to other ISP holders. We, therefore, feel that the appellant being a Public sector undertaking is not going to benefit from withholding any information or by evading any service tax. Such commission can not be attributed as an act for deliberate evasion of service tax. Since we find that the element necessary for invoking the provisions of section 78 of the Finance Act are not present in this case, penalty under section 78 cannot be imposed. While holding the above view, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he view recorded by him, I hereby record my separate order. I find that the issues to be decided in this appeal as follows: - a)Whether the demand made under the facts and circumstances is Revenue neutral. b)If the situation is revenue neutral, whether the extended period of limitation is attracted. c)Who is the service provider and who is the service receiver under the facts and circumstances. 12. NIXI or the National Internet Exchange of India (NIXI) is a government non-profit company established in 2003 to provide 'Neutral Internet Exchange Point services in India'. Its object is to provide a meeting point of Internet service providers (ISP) with the main purpose to facilitate the handing over of domestic Internet traffic between the peering ISP Members, rather than using servers elsewhere (abroad). This enables more efficient use of international band with and saves foreign exchange. It also improves the quality of service for the customers of member ISP, by being able to avoid multiple international hops and thus lowering delays. NIXI is managed and operated on a neutral basis, in line with the best practices for such initiatives globally. Since the year 2005, NIXI has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments that describe the terms and conditions to which both are subject. These agreements allow the use of another's network to handle traffic where it is ulitmaterly delivered. They usually do not charge each other for this use. Bilateral peering is an agreement between two parties. Multilateral peering is an agreement between more than two parties. Internet Peering is the business relationship whereby two ISP companies, reciprocally provide access to each other's customers. Internet Peering is typically settlement-free, meaning that neither party pays the other for access to each other's customers, reflective of the underlying notion that peering is a relationship of approximately equal value to each party. Both parties to the agreement benefit about the same from the relationship. Thus, peering is a voluntary interconnection of administratively separate for the purpose of exchanging traffic between the customers of each network. The pure definition of peering is settlement-free or 'sender keeps all, "meaning that neither party pays the other for the exchanged traffic. Peering requires physical interconnection of the networks, an exchange of information through the (BGP) routing p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties. Further, NIXI charges a membership fee per annum of Rs. 1,000/- per annum, joining charges - one time Rs. 1000 and connecting charges, on the port capacity (slab rate). 19. Thus, evidently the transaction of Internet Tele-communication Services - Internet backbone service is between 2 or more ISPs and NIXI is only a facilitator, which is neither the service provider nor the service receiver. Rather NIXI is a company registered under section 25 of the Companies Act (non-profit organization), is only a facilitator providing for carrying of data on the backbone of others service providers. In other words, a mutual or neutral exchange for the benefit of all ISPs. 20. In the facts of the present case, admittedly, the peering arrangement is between ISP's, but the appellant - MTNL has raised invoice on NIXI, which is not the service provider, nor an ISP. Thus, the demand of service tax on such bills raised by the appellant - ISP on NIXI, is totally misconceived. There being no relation of service provider and service receiver. Thus, in the facts and circumstances, the other questions become academic. In the facts and circumstances, I hold that the show cause notice is wholly m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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