2007 (12) TMI 22 - AT - Service Tax

Tribunal overturns order due to Circular enforcement, lack of legality, Revenue non-contest, and legal precedents.

BSNL Versus COMMISSIONER OF SERVICE TAX

The Tribunal allowed the appeal, citing the enforcement of a Board's Circular, the lack of legality in the impugned order, and the absence of contest from ... In view of the Circular 91/2/2007, Interconnectivity usage charges could not be treated as towards services rendered as leased circuit services – Revenue not contesting this circular - Appellant being Statutory Govt Body, can’t be said having mala fide intention to evade tax – Penalty unjustified Issues:Challenge to Review Adjudication Order, Service Tax on Inter Connectivity service, Enforcement of Board's Circular, Legality of Impugned Order, Tribunal Rulings on similar issues, Levying of Penalty, Applicability of Service Tax.Analysis:1. Challenge to Review Adjudication Order:The appellant, a PSU unit, challenged the Review Adjudication Order confirming a significant amount towards Service Tax. The matter involved the provision of 'Inter Connectivity' service to cellular/mobile operators, which was subject to service tax. The appellant obtained clearance to pursue the appeal against the order.2. Enforcement of Board's Circular:The Revenue enforced Board's Circular No. 91/2/2007-S.T., dated 12-3-2007, which led to the conclusion that the impugned order lacked legality. The Commissioner conceded that the order could not be enforced in light of the circular.3. Tribunal Rulings and Legal Precedents:The appellant's counsel referred to Tribunal rulings in similar cases to support the appeal. Rulings in cases like Reliance Telecom Ltd. v. CST, Fascel Ltd. v. CST, and Surat Municipal Corpn. v. Commissioner of Central Excise were cited to argue against the applicability of penalty and service tax in the present case.4. Levying of Penalty:The Tribunal considered the submissions from both sides and noted that the Commissioner accepted the Board's Circular, leading to the conclusion that the impugned order lacked legality and could not be enforced. The Tribunal also found that the penalty was not leviable based on legal precedents cited by the appellant's counsel.5. Applicability of Service Tax:The judgment clarified that the activity in question was not taxable up to a certain date and was not subject to service tax after a specific amendment in the Finance Act 2007. The Revenue did not contest the issue based on the Board's Circular, leading to the allowance of the stay application and the appeal with consequential relief.In conclusion, the Tribunal allowed the appeal based on the enforcement of the Board's Circular, the lack of legality in the impugned order, and the absence of contest from the Revenue. The decision was also influenced by relevant legal precedents and the non-leviability of penalty in the given circumstances.