2007 (4) TMI 253 - AT - Service Tax

Mobile Operator to Deposit Rs. 3 Lakhs for Waiver: Balance Duty & Penalty

The Tribunal directed the Mobile Operator appellant to deposit Rs. 3 lakhs within eight weeks to waive the balance duty amount and entire penalty, with ... Agreement with various Foreign Mobile Operators to provide international roaming facility to its customers on visit to India – appellant claim benefit of Notification 6/99-S.T on amount received from the Foreign Mobile Operator in foreign exchange - entire amount for which the bill was raised by the applicant is not received and only partly received after adjusting amounts due on account of services done by the foreign operator to the clients of applicant – receipt of part amount indicate repatriation and sending of funds outside India - Prima facie, the case of the appellant is an arguable case – stay not granted completely Issues: Taxability of services provided by a Mobile Operator under Notification 6/99-S.T.Analysis:1. Facts and Background: The appellant, a Mobile Operator providing services to foreign subscribers, claimed exemption under Notification 6/99-S.T. for services rendered and payments received in convertible foreign exchange.2. Contention: The appellant argued that they only receive a net amount from Foreign Mobile Operators after adjusting for services provided by the foreign operator to the appellant's clients. The adjudicating authority and Commissioner (Appeals) denied the exemption, considering only the balance amount repatriated as eligible for exemption.3. Legal Interpretation: The Tribunal noted that the appellant did not receive the entire billed amount and only a part was received, which could be seen as partly repatriating funds for services rendered in India. The Tribunal found the appellant's case arguable but not sufficient for a total waiver of the amount payable.4. Judgment: The Tribunal directed the appellant to deposit Rs. 3 lakhs within eight weeks and report compliance. Upon this deposit, the pre-deposit of the balance duty amount and the entire penalty would be waived, and recovery stayed during the appeal process.5. Conclusion: The Tribunal's decision balanced the appellant's argument for exemption under the notification with the need to ensure compliance with tax liabilities. The appellant was required to make a partial deposit while the appeal was pending, indicating a reasoned approach to the taxability of services provided by the Mobile Operator under the relevant notification.