International inbound roaming services held as export, not taxable due to recipient location. Previous decisions overridden. Interest/penalties unwarranted. Orders set aside.

The Tribunal held that the international inbound roaming services provided by the appellant qualify as export of services. As the service recipient, the foreign telecom operator, is located outside India, the services are not taxable. Previous Tribunal decisions and circulars supporting taxability were overridden by the Master Circular, reinforcing the appellant's position. Consequently, the imposition of interest and penalties was deemed unwarranted. The orders demanding service tax were set aside, and the appeals were allowed with consequential relief in accordance with the law.

---

---

Issues Involved:
1. Liability of service tax on international inbound roaming services.
2. Identification of the service recipient for international inbound roaming services.
3. Applicability of Export of Service Rules, 2005 and Place of Provision of Services Rules, 2012.
4. Relevance of previous Tribunal decisions and circulars.
5. Legitimacy of interest and penalty imposition.

Detailed Analysis:

1. Liability of Service Tax on International Inbound Roaming Services:
The primary issue is whether the appellants are liable to pay service tax on the international inbound roaming services provided to subscribers of foreign telecom companies visiting India. The department's view was that these services fall under the taxable category of "Telecommunication Service," and thus, service tax is applicable.

2. Identification of the Service Recipient:
The Tribunal examined whether the service recipient is the foreign telecom operator (FTO) or the international inbound roamer (subscriber). It was concluded that the service recipient is the FTO, as the agreement to provide services is between the appellant and the FTO, not the inbound roamer. The inbound roamer benefits from the arrangement but is not the direct service recipient.

3. Applicability of Export of Service Rules, 2005 and Place of Provision of Services Rules, 2012:
For the period prior to 01.07.2012, under Rule 3(iii) of the Export of Service Rules, services provided to FTOs are considered export if the service recipient is located outside India. Post 01.07.2012, Rule 3 of the Place of Provision of Services Rules, 2012, states that the location of the service recipient determines the place of service provision. Since the FTO is located outside India, the services qualify as export for both periods.

4. Relevance of Previous Tribunal Decisions and Circulars:
The appellant cited several Tribunal decisions, including Vodafone Essar Cellular Limited vs. CCE, Pune, where it was held that such transactions qualify as export of services. The department argued based on Notification No. 36/2007 and Circular No. 90/1/2007-ST, which suggested taxability. However, the Tribunal emphasized that the Master Circular dated 23.08.2007 supersedes all previous circulars, including Circular No. 90/1/2007-ST, thus supporting the appellant's position.

The Tribunal also noted the decision in Verizon Communication India Pvt. Ltd. vs. Assistant Commissioner, Service Tax, which reinforced that the Master Circular supersedes earlier circulars, including those that suggested these services are taxable.

5. Legitimacy of Interest and Penalty Imposition:
Given that the services were deemed export and not taxable, the Tribunal found that the imposition of interest and penalties was not tenable. The appellant's earlier refund claims for service tax paid on these services were granted, reinforcing the position that these services are export and not subject to tax.

Conclusion:
The Tribunal concluded that the services provided by the appellant are not liable to service tax as they qualify as export of services. The impugned orders demanding service tax, interest, and penalties were set aside, and the appeals were allowed with consequential relief as per law.

---