Vodafone's Roaming Services Exempt from Service Tax: Tribunal Upholds Export Status

The appellant, Vodafone Idea Ltd., provided roaming services to international inbound roamers and received income from foreign network operators. The issue was whether these services were subject to Service Tax. The Tribunal's earlier decision in the appellant's own case held that the services amounted to export of service and were not subject to tax. The majority upheld this decision, stating that the services were provided to Foreign Telecommunication Operator Companies (FTOs) under International GSM Roaming Agreements, making the FTO the service recipient and the services exempt from Service Tax.

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Issues Involved:
1. Whether international inbound roaming charges received by the appellant are subject to levy of Service Tax.
2. Whether the Tribunal's earlier decision in the appellant's own case is a binding precedent for the period post-01.07.2012.

Issue 1: Levy of Service Tax on International Inbound Roaming Charges

The appellant, Vodafone Idea Ltd., provided roaming services to international inbound roamers and received income from foreign network operators. The Department observed that these services were provided in India and consumed in the Indian taxable territory, thus liable to Service Tax. The appellant contended that these services qualify as 'export of services' under the Export of Services Rules, 2005, as they received income in foreign currency. A Show Cause Notice was issued, and the Original Authority confirmed the demand for Service Tax along with interest and penalties. The appellant argued that the services were provided to Foreign Telecommunication Operator Companies (FTOs) under International GSM Roaming Agreements, and the actual service recipient was the FTO, not the inbound roamer. The Tribunal had previously ruled in favor of the appellant, stating that the services amounted to export of service and were not exigible to Service Tax.

Issue 2: Binding Precedent of Tribunal's Earlier Decision

The Tribunal's earlier decision in the appellant's own case for the period from 01.04.2011 to 30.06.2012 and 01.10.2013 to 30.09.2014 held that the services amounted to export of service and were not subject to Service Tax. The Tribunal found no reason to deviate from this decision, concluding that the demand could not be sustained. However, the Member (Technical) dissented, arguing that the earlier decision did not adequately consider the provisions of the Place of Provision of Services Rules, 2012, which came into effect post-01.07.2012. The Member (Technical) opined that the service recipient was the inbound roamer located in India, making the services taxable. The Member (Judicial) disagreed, maintaining that the FTO was the service recipient under the legal agreement with the appellant, and thus the services were export services.

Majority Order:

The majority held that the Tribunal's earlier decision in the appellant's own case should be applied, and the appeal was allowed with consequential reliefs. The decision emphasized that the FTO was the service recipient, and the services provided amounted to export of services, thus not subject to Service Tax.

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