TaxTMI 
TaxTMI 
2018 (3) TMI 1007
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....after referred to as assessee and department for the sake of convenience. 2. On behalf of assessee in Appeal Nos.ST/40024/2013 & ST/40242/2013, Ld. Counsel Shri G. Natarajan appeared and argued the matter and on behalf of assessee in Appeal No.ST/376/2012, Ld. Consultant Shri R.Balagopal appeared. 3. The brief facts of the case are that the assessee, BSNL is registered with the service tax department as providers of Telecommunication Services. The assessee provides telecommunication service to the subscribers / customers who have obtained telephone connection and to public customers / callers by an arrangement of Public Call Office (PCO). The PCOs are maintained by persons called PCO operators appointed by BSNL for this purpose. Prior....
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....the taxable value has to be arrived by including such discount. The non-inclusion of amount of discount given to PCO operators resulted in short payment of service tax by the BSNL. 5. Therefore separate SCNs were issued to different units which were confirmed by the Commissioner who also imposed penalty under Section 78 and dropped proposal to impose penalty under Section 76 against which appeals ST/376/2012 ST/388/2012 and ST/389/2012 have been filed. In respect of Tirunelveli unit, the order passed by original authority was appealed before Commissioner (Appeals) who dropped the demand, interest and penalties. Hence department appeal No.ST/40024/2014. The details of appeals, SCN, period involved is shown in the table below : S. No ....
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....mount realized by the PCO operators from their customers. The said issue is decided in the case of Bharti Infotel Ltd. Vs CCE Bhopal - 2006 (1) STR 107 (Tri.-Del.). The Commissioner (Appeals) has followed the said decision and set aside the demand. The department contends that decision in Bharti Infotel Ltd.(supra) is not applicable for the period post 1.6.2007. He argued that the amendment has nothing to do with the issue under consideration or the ratio laid down in the these decisions. The assessee is providing services only to PCO operator who is granted license to run the PCO. The department has made the demand alleging that when calls are made by customer by using the PCO, the appellant, BSNL is providing services to caller and not to....
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....cation service is provided to the ultimate consumer / caller / user of the PCO. Therefore, the assessee-BSNL is liable to pay service tax on the entire amount that is collected from the user of the PCO. He submits that the decision in the case of Bharti Infotel Ltd. (supra) is not applicable to the case, as Bharati Infotel was related to the period prior to the amendment. 8. Heard both sides. The dispute is whether the assessee has to discharge service tax on the entire amount collected by the PCO operator from the PCO user (customer). 8.1 For better appreciation, the definition as it stood before 1.6.2007 as well after 1.6.2007 is reproduced as under :- "Pre 01.06.2007 Definitions 65 (105) (b). Taxable service means....
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....Ltd. (supra), it was decided that such commission / discount cannot be included in the value for levy of service tax. The said decision was followed by Tribunal in BSNL, Bijapur, Karnataka reported in 2014-TIOL-3033-CESTAT-Bang. 8.4 The argument of the Ld.AR, that after the amendment to Sec.65 (105) (zzzx) the said decision will not apply is countered by the counsel for appellant by relying on Notification No.2/2011. 9. The Notification No.2/2011-ST dt.1.3.2011 has inserted an Explanation in Rule 5, clause (1) of Service Tax (Determination of Value) Rules, 2006. The said Explanation is as under : "3. In the said rules, in rule 5, after sub-rule (1), the following Explanation shall be inserted, with effect from the 1st day of ....