TaxTMI 
TaxTMI 
2014 (6) TMI 655
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....ved international private leased circuit services from M/s. Verizon Communications Singapore Pte Ltd., Singapore and made payments for the same to the foreign service provider. Two show cause notices were issued to the appellant demanding Service Tax for an amount of Rs. 3,28,93,449/- for the period 1-4-2003 to 31-3-2008 vide notice dated 10-10-2008 and an amount of Rs. 1,55,918/- for the period 1-4-2008 to 31-3-2009 vide notice dated 30-9-2009 under reverse charge mechanism in terms of Section 66A of the Finance Act, 1994, for the "Leased Circuit"/"Telecommunication service" received from Singapore. The appellant contested the levy on the ground that as per the definition of taxable service relating to "leased circuit" services/"telecommunication services", the same has to be provided by a service provider who is a 'telegraph authority' under the Indian Telegraph Act. As the Singapore based service provider is not a 'telegraph authority', they are not liable to discharge any Service Tax liability under Section 66A. Since Section 66A came into force with effect from 18-4-2006, the demand is not sustainable for the period prior to 18-4-2006. It was also argued that bulk of the deman....
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....sion of Hon'ble High Court of Andhra Pradesh in the case of Karvy Consultants Ltd. [2006 (1) S.T.R. 7 (A.P.)] in support of his contention that the transaction is not a taxable transaction. Accordingly he prays for allowing the appeal, with consequential relief. 4. The ld. Additional Commissioner (AR) appearing for the Revenue strongly refutes the appellant's contentions and argues as follows :- (i) The foreign service provider is licensed to provide telecommunication service under Section 5 of the Telecommunications Act, 1999 of Singapore and is a telegraph authority. (ii) Service tax is demanded from the appellant not under Section 66 in the capacity of the provider of taxable service but under Section 66A in the capacity of recipient of taxable service. (iii) There is no dispute that the service in question is specified in Section 65(105). (iv) Since Section 66A creates a deeming fiction that the service recipient is the deemed 'service provider', the fact that the foreign service provider is not a telegraph authority should not come in the way of enforcing Section 66A. (v)  ....
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....of service directly concerned with the provision of service is located, shall be treated as the country from which the service is provided or to be provided. (2) Where a person is carrying on a business through a permanent establishment in India and through another permanent establishment in a country other than India, such permanent establishments shall be treated as separate persons for the purposes of this section. Explanation 1. - A person carrying on a business through a branch or agency in any country shall be treated as having a business establishment in that country. Explanation 2. - Usual place of residence, in relation to a body corporate, means the place where it is incorporated or otherwise legally constituted." 5.2 From the above provisions, it is clear that under Section 66 Service Tax is leviable on taxable services referred to in Section 65(105) of the Act. Similarly even under Section 66A Service Tax is payable by the recipient of the service only when a taxable service specified in Clause (105) of Section 65 is received from a foreign service provider. In other words, what has to be seen essentially and primarily for leviability to Service Tax is whe....
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....st receipt of services from the service provider situated outside India/group companies under reverse charge mechanism [Section 66A of the Finance Act, 1994 read with Rule 2(1)(d)(iv) of the Service Tax Rules, 1994]. 2. The matter has been examined. The activities are in the nature of Leased Circuit services presently covered under Telecommunication service. However, for getting classified under Telecommunication service, Section 65(105)(zzzx) of the Finance Act, 1994 provides that the service should be provided by a Telegraph authority. Telecommunication service as defined under Section 65(109a) covers services which are provided by a person who has been granted a licence under the first proviso to sub-section (1) of Section 4 of the Indian Telegraph Act, 1885. In this situation in the instant case since the service provider is located abroad, he is not covered under the definition given in Section 65(109a). Thus the service provided by foreign vendors cannot be taxed under Telecommunication service." The clarification given by the Board squarely deals with the situation in the case before us. As per the said clarification, no Service Tax is payable under Section 66A if lea....