Appellant not liable for service tax on NIXI invoices; liable for services to other ISPs.

The appellant was found not liable to pay service tax on invoices raised on NIXI as NIXI was deemed a facilitator, not an ISP. However, the appellant was held liable to pay service tax on services provided to other ISPs through NIXI, as evidenced by invoicing and admission of tax liability. The conclusion was that there was no direct service provider-service recipient relationship between the appellant and NIXI, absolving the appellant from service tax payment. The case will proceed to a regular division bench for further appeal.

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Issues Involved:
1. Liability of the appellant to pay service tax on invoices raised on NIXI.
2. Whether the appellant is liable to pay service tax on services provided to other ISPs through NIXI.

Summary:

1. Liability of the appellant to pay service tax on invoices raised on NIXI:

The division bench referred the issue of whether the appellant is liable to pay service tax on invoices raised on NIXI, as NIXI is not an ISP and hence neither the service provider nor the service receiver. The Member (Judicial) held that the appellant is not liable to pay service tax on invoices raised on NIXI because NIXI is only a facilitator and not an ISP. The Commissioner observed that the appellant had entered into a service transaction with NIXI, where MTNL is the service provider, and NIXI is the service recipient. However, the Member (Judicial) concluded that the demand for service tax on such bills raised by the appellant on NIXI is misconceived as there is no relationship of service provider and service receiver.

2. Liability to pay service tax on services provided to other ISPs through NIXI:

The Member (Technical) held that the appellant is liable to pay service tax on services provided to other ISPs through NIXI, as the appellant had raised an invoice on NIXI and admitted to pay service tax. The Commissioner confirmed the demand for service tax, stating that the appellant had provided taxable services against consideration, calculated based on the "requester pays" policy of NIXI. The Member (Technical) noted that the appellant had issued an invoice to NIXI after the investigation, which included the service tax element, and hence the service tax is payable from the date of invoice.

Conclusion:

The third member concluded that there is no relationship of service provider and service recipient between the appellant and NIXI, and therefore, the appellant is not liable to pay service tax. Mere raising of an invoice by the appellant on NIXI during the investigation would be of no consequence as the appellant had not provided any service to NIXI. The matter will now be placed before the regular division bench for hearing of the appeal.

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