Telecom provider wins tax case on interconnection charges pre-2007 The Tribunal ruled in favor of the telecom service provider, holding that interconnection usage charges were not subject to service tax for the period ...
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Telecom provider wins tax case on interconnection charges pre-2007
The Tribunal ruled in favor of the telecom service provider, holding that interconnection usage charges were not subject to service tax for the period before the enactment of the Finance Bill of 2007. The impugned order was set aside, and the appeal was allowed with any consequential relief.
Issues: Leviability of service tax on interconnection usage charges collected by a telecommunication service provider.
Analysis: The appeal was filed against Order-in-Appeal No. 105/2007CE dated 08/03/2007, concerning the imposition of service tax on interconnection usage charges collected by a telecommunication service provider. The appellant, engaged in providing telecommunication services, had collected these charges from mobile service providers for using BSNL network facilities. The authorities contended that these charges fell under the category of 'leased circuits' and were subject to service tax. The appellant challenged this decision by filing the present appeal.
During the hearing, no representative appeared on behalf of the appellant. The Revenue was represented by Shri N. Jagadish, Superintendent(AR). The Tribunal noted that previous appeals had favored telecom service providers regarding the leviability of service tax on interconnection usage charges. Referring to the case of Bharti Airtel Ltd. Vs. CST, Ahmedabad [2008(12) STR 565 (Tri. Ahmd.)], the Tribunal highlighted the clarifications in CBEC Circular No. 91/2/2007-S.T. dated 12-3-2007. This circular stated that service tax would be applicable to interconnection usage charges from the date the Finance Bill of 2007 became an Act, and for the period before that, such charges would not be subject to service tax. The Tribunal, following the decision in the Fascel Limited case and the Board's clarification, set aside the impugned order and allowed the appeal with any consequential relief.
In conclusion, the Tribunal ruled in favor of the telecom service provider, holding that interconnection usage charges were not subject to service tax for the period before the enactment of the Finance Bill of 2007. The impugned order was set aside, and the appeal was allowed with any consequential relief.
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