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Issues: Whether leased circuit or telecommunication services received from a foreign vendor were taxable under reverse charge under Section 66A of the Finance Act, 1994 when the service was not provided by a telegraph authority.
Analysis: Liability under Section 66A arises only when the service received from outside India is a taxable service specified in Section 65(105) of the Finance Act, 1994. For leased circuit services, the taxable entry required the service to be provided by a telegraph authority, and the statutory definition of telegraph authority was linked to the Indian Telegraph Act, 1885. The foreign service provider was not shown to be such an authority, so the essential condition for taxability was absent. The departmental clarification on international private leased circuit charges supported the same construction, and the reliance on distinguishable precedent did not alter the position.
Conclusion: The service was not taxable under Section 66 or Section 66A of the Finance Act, 1994, and the demand could not be sustained.
Ratio Decidendi: Reverse charge service tax can be levied only where the foreign-sourced service satisfies the exact statutory description of the taxable service, including any condition as to the class of service provider specified in the charging entry.
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