Tribunal nullifies service tax demand citing amendment effective date, grants appeal with relief.

The Tribunal set aside the demand for service tax for the period in question, based on the specific effective date of the relevant amendment, and allowed the appeal with consequential relief.

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Issues involved:
The appeal concerns the demand of service tax under telecom services for the period 01.06.2008 to 31.03.2011.

Details of the judgment:

Issue 1 - Demand of Service Tax:
The appellant, M/s. Bharat Sanchar Nigam Ltd. (BSNL), provides telecom services to subscribers and the public through Public Call Offices (PCOs) maintained by PCO operators. Prior to 01.06.2008, calls from PCOs were charged at Re.1 per Metered Call Unit (MCU), with a portion allocated for service tax. However, a policy revision in 2008 led to a change in the tariff structure, with PCO operators being paid on a discount basis. This change resulted in BSNL not including the discounts given to PCO operators in the taxable value, leading to a shortfall in service tax payment. Show cause notices were issued, and penalties imposed. The appellant contested the demand, arguing that the amendment regarding taxable value effective from 01.03.2011 should apply prospectively. The Tribunal, considering the relevant provisions and past decisions, held that the demand for the period before 01.03.2011 cannot be sustained due to the specific effective date of the amendment. Therefore, the demand for service tax was set aside, and the appeal was allowed.

Conclusion:
The Tribunal set aside the demand for service tax for the period in question, based on the specific effective date of the relevant amendment, and allowed the appeal with consequential relief.

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