TaxTMI 
TaxTMI 
2007 (1) TMI 51
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....cation network of their own; they have subscribers of their own and they are also paying service tax on the call charges collected from their subscribers; (c) Their subscribers are talking not only amongst themselves but also talk to subscribers of other telecom authorities and receives the calls originating in the network of other telecom authorities whether basic or mobile. There is an arrangement by which the facilities of different telecom authorities are shared and the expenses and incomes are shared. There is, therefore, interconnectivity between basic/cellular operators either for transit or termination of calls. This link can be by way of a cable, optical fibre, radio frequency or a satellite link. These activities and charges fo....
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....ple, m the case of Reliance Infocomm, who are a later entrant, Reliance Infocomm were required to provide the infrastructure for link and thereafter when calls from their subscribers are received, they are received into switches installed in the exchanges maintained by the appellant; when Reliance Infocomm subscriber makes a call, the facilities of not only Reliance Infocomm is used but also the facilities of appellant is used. However, the charges for the calls are collected only by Reliance Infocomm, a part of it shared by Reliance Infocomm to the appellant-company. Similar is the arrangement in respect of other subscribers of other telecom authorities whose calls terminated with the subscribers of the appellant- company. (d) The appel....
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....a High Court which dealt with the nature of services rendered by PCO in the case of PCO v. Telecom Authority has taken the view that PCO themselves function as telecom authorities and that they cannot be treated as subscriber and that service tax collected by them as PCO has to be paid directly to the Central Government. 5. The learned Authorised Representative of the department during the course of his arguments and in the written summary of submissions made, inter alia, the following submissions: (a) The agreement between the appellant-company and the other telecom authorities are referred to as interconnect agreements. (b) This inter connection is provided by the appellant by way of a dedicated link to other telephone operators ....
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....ber while receiving the services from an other telecom authority. (g) As regards the claim of revenue neutrality when no tax has been paid, the question of availability of Cenvat credit cannot and does not arise. Further, service tax on leased circuit was payable on and from 16-7-2001 while benefit of Cenvat credit has been extended to service tax only in 2003. 6. We have carefully considered the rival submissions. To enable the subscribers of one telecom authority to access the subscribers belonging to other telecom authority there has to be interconnection between the telecom authorities. These interconnection/link could be provided by way of a cable; optical fibre, radio frequency or through a satellite link. Therefore, it can be c....
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....e Infocomm should not arise. 7. Similar is the arrangement between the appellant-company and other telecom authorities. The charges of 30 paisa for every pulse (each call is measured in terms of number of pulses for the purpose of calculating charges) by the concerned telecom authority is irrespective of who owns or established the link or circuit. This goes to show that the charges calculated cannot be merely for the purpose of using the connecting circuit between two telecom authorities 8. When a call for one telecom authority is made to a subscriber belonging to another telecom authority the caller makes the full payment for the call to the first telecom authority. However, for the purpose of establishing contact with his counter-p....