AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 521
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....connection Usage" to other telecommunication service providers for 'Short Message Service" (SMS) which means that SMS originating in the network of other telecommunication service providers terminate in the network of the Appellant. 3. Under the Telecommunication Interconnection Usage Charges Regulations 2003 there was provision for charging Interconnection Usage termination charges only in respect of telephone calls. The said Regulations did not specify and provide for charging interconnection usage termination charges in respect of SMS. Therefore, in respect of interconnection usage provided to other telecommunication service providers whereby SMS originating in their network terminated in the Appellant‟s network, no consideration was charged for such service. Since there was no consideration for the interconnection usage provided in respect of SMS, no service tax was being paid. 4. The said Telecommunication Interconnection Usage Charges Regulations were amended with effect from 9th March 2009 and by the said amendment it was provided that Interconnection usage charge for SMS would be under "forbearance" (i.e. would not be fixed by TRAI) and it would be left to be ar....
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....elecom service providers then approached the 'Telecom Disputes Settlement & Appellate Tribunal (TDSAT)‟, New Delhi, which by Interim orders passed in November 2012, directed the Appellant not to disconnect the Interconnection usage for SMS provided that the said Telecom service providers start paying 50% of the charges proposed by the Appellant for the future. 10. After the interim order of TDSAT, the said other Telecom service providers started paying to the Appellant from November 2012, 50% of the charges proposed by the Appellant and in respect of such receipts, the Appellant has paid service tax. 11. Thereafter, in February 2013, the DGCEI commenced investigations against the Appellant in respect of the service tax not paid for the period April 2011 to September 2012. The DGCEI recorded statements of the Appellant's Deputy General Manager (Jasroop Sandhu), Associate Vice President (Amitabh Khemka) and Executive Vice president (Rohit Agarwal), all of whom have in their statements maintained that no agreement/ contract was arrived at and executed with the said 6 Telecom service providers and that in absence of any agreement as to the consideration, the interconnection....
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....t of taxation shall be the date of completion of service and as per the Second Proviso, in case of continuous supply of service, the date of completion of service shall be the date of completion of the periodical event specified in the contract when the receiver of service is required to make any payment to the service provider. In the present case there is no contract providing for payment to be made by the service receiver to the Appellant on the happening of a periodical event. Thus the completion of service as contemplated by the Rules, has not occurred and therefore point of taxation has not occurred even in terms of the Proviso to Rule 3(a). 17. On the other hand, it is the case of the department that the Appellant had addressed various letters to the said 6 Telecom operators calling upon them to enter into agreement/contract specifying the consideration/ charge of 10 paise per SMS and to pay the same to the Appellant. According to the department, the said letters addressed by the Appellant amount to issue of Invoices, and hence the Point of taxation had occurred in accordance with Rule 3(a) of the said Rules. Reliance is placed by the department in this behalf on the deci....
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....ction usage for SMS, there was no taxable service. 21. The aforesaid conclusion must also follow from the definition of service given in Section 65B (44) of the Finance Act 1994 which requires that to constitute a service, the activity carried out by a person for another should be for consideration. In the present case, the telecom service providers in question declined to enter into agreements providing for charging of consideration for the interconnection usage for SMS and no amount was charged and paid for the interconnection usage for SMS. 22. In the decision of the Tribunal in Vodafone Cellular Ltd vs. CCE - 2016 (42) STR 1048, the issue whether in the absence of their being consideration on account of absence of agreement between the parties as to the amount to be charged and admittedly when no amount was charged and paid, was not raised and accordingly the Tribunal did not have occasion to consider and decide the said issue. The said decision therefore, cannot be a precedent on that issue. 23. Further, the issue whether in the absence of there being an agreed price, there can be issuance of any Invoice was also not raised before the Tribunal in the said decision in ....
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....ly of service, the date of completion of service shall be the date of completion of the periodical event specified in the contract, when the receiver of service is required to make any payment to the service provider. 'Continuous supply of service‟ is defined in Rule 2 (c) of the Point of Taxation Rules 2011 to include a service prescribed by the Central Government by Notification, to be a continuous supply of service. By Notifications No. 28/11-ST dated 1-4-2011 and 38/2012-ST dated 20-6-2012, the Government has specified telecommunication service as Continuous supply of service. 26. Accordingly, in the present case, the completion of service would occur on the happening of the periodical event specified in the contract, when the receiver of service is required to make any payment to the service provider. In the present case there is no contract providing for payment to be made by the service receiver to the Appellant on the happening of a periodical event. Thus the completion of service as contemplated by the Rules has not occurred and therefore point of taxation has not occurred even in terms of the Proviso to Rule 3(a). 27. Rule 3(b) of the Point of Taxation Rules 2....