TMI Blog2022 (4) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... T and Genysis through data link / leased circuit. As per the definition of Telecommunication Service in Section 65(105)(zzzx) of the Finance Act, 1994, the taxable service means any service provided or to be provided to any person by the Telegraph Authority in relation to Telecommunication Service , In the present case, the service provider is located outside India. He cannot be treated as Telegraph Authority as Telegraph Authority has to be recognised by an authority of law prevailing in India, therefore, service provider cannot be treated as Telegraph Authority. Accordingly, the condition of the definition is not satisfied - In the facts of the present case, service is provided by a foreign entity will not fall under the definition of Telecommunication Service . Therefore, the appellant is not liable to pay service under Reverse Charge Mechanism. This identical issue has been considered by this Tribunal in the case of TCS E-SERVE LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI [ 2014 (6) TMI 655 - CESTAT MUMBAI] has held that Only leased circuit services rendered by a telegraph authority is taxable and since the foreign vendor is not such an authority, the question of lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyees who have the expertise required by HTSL. In order to help HII make the selection, HTSL shall provide HII with a description of the qualifications required by HTSL. Based on the list provided by HTSL, HII shall identify the people and select the employees. The employees seconded to HTSL shall continue to be on payroll of HII only for the purpose of continuation of social security / retrial benefits and for all practical purposes, HTSL shall be the employer. 2.2 As per the above agreement, the appellant has agreed to reimburse HII inter alia all renumeration of the employees including but not limited to salary, bonuses and social benefits of the employees paid by HII and all out-of-pocket expenses incurred by the seconded employees paid by HII including business travel expenses and other miscellaneous expenses, directly related to the secondment of the employee. 2.3 In pursuance of the Secondment Agreement, HII deputed one Dr. Krishna to the appellant-company. Dr. Krishna functioned as the CEO of the appellant during the impugned period. The salaries and other expenses of Dr. Krishna were originally disbursed by HII. Subsequently, HII furnished a statement peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice, in the appellant s own case, this Tribunal held that arrangement for availing the services of executive appointed in the appellant s company by the foreign vendor does not amount to Manpower Recruitment or Supply Agency Service. Accordingly, the demand was dropped. In the judgment reported at Honeywell Technology Solutions Lab Pvt. Ltd. (supra), it was passed the following order: 11. We find that similar issue arose before this Tribunal in the case of M/s. Volkswagen India (Pvt.) Ltd. V. CCE, Pune-I 2014 (34) S.T.R. 135 (Tri.-Mumbai) upheld in 2016 (42) S.T.R. J145 (S.C) wherein this Tribunal in para 5.1 held as under: 5.1 In view of the clauses of agreements noticed herein above and other facts, we hold that the global employees working under the appellant are working as their employees and having employee-employer relationship. It is further held that there is no 6 6 supply of manpower service rendered to the appellant by the foreign/holding company. The method of disbursement of salary cannot determine the nature of transaction. Revenue had filed appeal against the order of this Tribunal which was dismissed by Hon‟ble Supreme Court on the ground of limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 It will be useful to peruse the provisions of Sections 66 and 66A of the Finance Act at this juncture. The relevant portions of the said sections are extracted below :- 66. Charge of service tax . - There shall be levied a tax (hereinafter referred to as the service tax) at the rate of twelve per cent of the value of taxable services referred to in sub-clauses (a), . (zzzzv) and (zzzzw) of Clause (105) of Section 65 and collected in such manner as may be prescribed. 66A. Charge of Service Tax on services received from outside India. - (1) Where any service specified in Clause (105) of Section 65 is, - (a) provided or to be provided by a person who has established a business or has a fixed establishment from which the service is provided or to be provided or has his permanent address or usual place of residence, in a country other than India, and (b) received by a person (hereinafter referred to as the recipient) who has his place of business, fixed establishment, permanent address or usual place of residence, in India, such service shall, for the purposes of this section, be taxable service, and such taxable service shall be treated as if the recipient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny service provided or to be provided - (a) to (zc) (zd) to a subscriber, by the telegraph authority in relation to a leased circuit. With effect from 1-6-2007, leased circuit services got merged into telecommunication service as defined and the taxable service under Section 65(105) read as follows :- (zzzx) to any person, by the telegraph authority in relation to telecommunication service. In other words, for the leased circuit service to be taxable, it has to be provided by a telegraph authority . As per Section 65(111), Telegraph authority has the meaning assigned to it in Clause (6) of Section 3 of the Indian Telegraph Act, 1885 and includes a person who has been granted a licence under the first proviso to sub-section (1) of Section 4 of that Act. It is not the case of the department that the foreign service provider or the appellant herein is a telegraph authority as defined in the law. If that be so, leased circuit service provided by a person who is a telegraph authority is not liable to Service Tax either under Section 66 or under Section 66A and we hold accordingly. 5.4 This legal position is evident from the clarification issued by the Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice provider should be both a company and with principal business of receiving deposits/lending. Mere registration as an NBFC is not enough to bring the activity under the purview of Service Tax levy. Applying the ratio to the facts of the present case, it is not enough that the service provider provides the leased circuit services but it should be a telegraph authority as defined in the Act. Unless both the conditions are cumulatively satisfied, service tax levy will not apply. 5.6 The reliance placed by the Revenue on the Unitech Ltd. case is of no help as the facts involved are distinguishable. The issue therein was whether services received from a commercial concern engaged in providing architect s services from abroad would be leviable to Service Tax. The relevant provisions provided that the service should be provided either by an architect registered in the register of architects maintained in India or by a commercial concern engaged in rendering services in the field of architecture. In respect of commercial concerns, there was no requirement of any registration in India. In that context, it was held that architect s services received from abroad from a commercial ..... X X X X Extracts X X X X X X X X Extracts X X X X
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