Tribunal rules HNO, not subscribers, liable for roaming services tax

The Tribunal held that the Home Network Operator (HNO) is the service recipient of services provided by a Foreign Telecommunication Operator (FTO) during international outbound roaming, not the HNO's subscribers. The activity of providing cellular/mobile services during roaming falls under 'Telecommunication Services,' not 'Business Auxiliary Service.' The appellant was not liable to pay service tax under Reverse Charge Mechanism for these services. The Tribunal allowed the appeal, setting aside the previous order and granting relief to the appellant in accordance with the law.

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Issues Involved:
1. Identification of the service recipient during international outbound roaming.
2. Classification of the service provided during international outbound roaming.
3. Taxability of the activity at the hands of the appellant under Reverse Charge Mechanism (RCM).

Summary:

1. Identification of the Service Recipient:
The primary issue was to determine who the recipient of the service provided by a Foreign Telecommunication Operator (FTO) to a subscriber of a Home Network Operator (HNO) during international outbound roaming is. The Tribunal held that during international outbound roaming, the HNO (appellant) is the service recipient of the services provided by the FTO, and not the HNO's subscribers/customers. This conclusion was based on the legal relationship and payment obligations defined in the agreement between the HNO and the FTO, as established in previous judgments such as M/s Vodafone Idea Limited.

2. Classification of the Service:
The Tribunal examined whether the activity of providing cellular/mobile services to a subscriber during international outbound roaming falls under 'Business Auxiliary Service' (BAS) as claimed by Revenue or 'Telecommunication Services' (TCS) as averred by the appellant. It was determined that the activity relates to TCS as defined by section 65(109a) of the Finance Act, 1994. The Tribunal referenced previous judgments, including Vodafone Cellular Ltd, which clarified that the same activity cannot be taxed under a different heading for the same period.

3. Taxability Under RCM:
The Tribunal addressed whether the appellant is liable to pay service tax under RCM on outbound roaming services received from the FTO. It was concluded that although the activity of providing cellular/mobile services during international outbound roaming relates to telecommunication service, the services provided by any person who is not a 'telegraph authority' are not taxable as defined by section 65(109a) of the Finance Act, 1994. Therefore, the activity is not exigible to service tax at the hands of the appellant under RCM, in line with the judicial discipline and previous rulings such as Vodafone Essar Digilink.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal and granting the appellant consequential relief as per law. The decision was pronounced in open court on 10.10.2023.

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