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of <h1>Appeal decision on service tax demand for leased circuit service and business auxiliary service</h1> <h3>M/s Rail Tel Corporation of India Ltd. Versus CCE (Adj.) New Delhi</h3> M/s Rail Tel Corporation of India Ltd. Versus CCE (Adj.) New Delhi - 2015 (40) S.T.R. 1131 (Tri. - Del.) , [2016] 95 VST 42 (CESTAT) Issues:1. Confirmation of service tax demand under leased circuit service and business auxiliary service for the period 2003-2006.2. Appellant's contentions regarding the nature of services provided and applicability of service tax.3. Interpretation of leased circuit service and business auxiliary service definitions.4. Analysis of the demand under business auxiliary service for leasing tower space.5. Assessment of suppression of facts and imposition of penalty.Confirmation of Service Tax Demand:The appeal was filed against the order confirming a service tax demand of Rs. 1,76,10,648 for the period 2003-2006. The demand was upheld for leased circuit service and business auxiliary service. The appellant had leased dark fiber cables and tower space to telecom operators without paying service tax, leading to the confirmation of the demand.Appellant's Contentions:The appellant argued that they did not lease circuits as a telegraph authority and leased dark fiber, not covered under leased circuit service. They contended that leasing tower space did not fall under business auxiliary service. The appellant claimed no wilful misstatement or suppression of facts on their part.Interpretation of Service Definitions:The definition of leased circuit and subscriber under the Finance Act was crucial in determining the applicability of service tax. The appellant, being a telegraph authority under the Indian Telegraph Act, provided dedicated dark fiber cable links to subscribers, satisfying the requirements of leased circuit service. However, the leasing of tower space did not fit under the definition of business auxiliary service.Analysis of Tower Space Leasing:The adjudicating authority classified the leasing of tower space under business auxiliary service before 1.6.2007. However, the Tribunal found that leasing tower space did not promote services provided by telecom operators, making the demand of Rs. 74,27,181 under business auxiliary service unsustainable.Suppression of Facts and Penalty Imposition:The Tribunal upheld the demand under leased circuit service due to the appellant's registration and clear provision of leased circuits. The appellant's failure to provide timely information and repeated reminders indicated suppression of facts, justifying the imposition of a mandatory penalty.In conclusion, the Tribunal partially allowed the appeal by setting aside the demand under business auxiliary service for tower space leasing but upheld the demand under leased circuit service along with interest and penalty.
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