CESTAT held that service tax cannot be levied on telephone...

CESTAT held that service tax cannot be levied on telephone charge waivers (CFA) provided by appellants to employees. The tribunal determined that free allowances constitute discounts/concessions rather than taxable consideration since benefits accrue to employees (service recipients) rather than the appellant (service provider). The bench rejected the department's best judgment method and assumptions-based tax computation, noting the show cause notice was vague regarding specified services. Following valuation principles, only consideration flowing from service recipient to provider is includable in gross taxable amount. Goodwill cannot be arbitrarily valued for taxation. The tribunal concluded that absent actual consideration received, CFA discounts fall outside service tax purview. Appeal allowed with full relief to appellant.