Service tax valuation includes reconnection and processing charges linked to activation and continued paging services.

Reconnection fee and wireless processing charges collected for radio paging services were treated as part of the gross amount charged from subscribers for valuation purposes. The valuation provisions were read to require service tax on amounts connected with activation and continued provision of paging services, and the earlier view on similar activation-related receipts was applied. On that basis, both reconnection charges and wireless processing charges were held includible in the taxable value and liable to service tax.

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Issues: Whether reconnection fee and wireless processing charges collected for radio paging services were includible in the taxable value for levy of service tax.

Analysis: The valuation provisions were read to require service tax on the gross amount charged from the subscriber. Reconnection charges were treated as amounts connected with activation of the paging service, and wireless processing charges were treated as charges ultimately recovered from customers for providing continuous paging services. Reliance was placed on the earlier view that similar activation-related receipts form part of taxable service and are exigible to service tax under the relevant charging and valuation provisions.

Conclusion: The charges were held to be includible in the taxable value and liable to service tax, against the assessee.

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