TaxTMI 
TaxTMI 
2019 (12) TMI 556
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....tor undertaking engaged in providing telephone services and telegram services etc., and is registered with Service Tax department for payment of service tax. Since there were three different divisions, separate service tax registrations had been obtained in respect of each. During the relevant period, some specified taxable services were exempted from the whole of payment of service tax by notification 03/1994 (ST) dt.30.06.1994 including the following two services which are relevant to the present case. This notification reads as follows. Service Tax - Exemption to specified Insurance Schemes and Telephone calls made from Public Booths, Free Telephones at Airports and Hospitals In exercise of the powers conferred by secti....
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....l.No.12 of the aforesaid notification exempted departmentally run public telephones for local calls and Sl.No.13 exempted guaranteed public telephone operating only for local calls. Learned counsel for the appellant explains that departmentally run public telephones are those which are run directly by the department. Guaranteed public telephones are those which are given by the department to individual vendors, shop-keepers etc., to be used as public telephones subject to the condition that the vendor guarantees a minimum payment of certain amount to the department regardless of how many calls were made from the telephone. In respect of both, the exemption was meant only for "local calls". The term "local call" has not been defined either i....
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....y, the demands were raised invoking extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994 along with interest under Section 75. It was also proposed to impose penalties under Section 76, 77 & 78 of the Finance Act, 1994. Accordingly, the present appeals have been filed. 4. On a specific query from the bench, learned counsel for the appellant submits that for the subsequent period they have been paying service tax on these services and the dispute is only for the relevant period. 5. The appeal of the appellant is on the following grounds: 1) The National Telecom Policy, 1994 formulated by the Government of India intended to extend the facility of telephones to every nook and corner of the countr....
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....ules which are the rules of the appellant themselves, if applied to the present case, make it very clear that no exemption is available. He would assert that merely because the policy of the Government was to enlarge the availability of telephones, it does not mean the exemption notification also automatically gets enlarged to cover such extended facilities. An exemption notification must be strictly construed as it has been written without any intendment or modifications. The exemption notification in this case is very clear that it is available only for local calls and the appellants were clearly not eligible for the benefit of this exemption notification. Regarding the invocation of extended period of limitation, he would assert that the....
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....ve benefit will NOT be available. The term local call is not defined in the notification. The Indian Telephone Rules, 1951, which are the rules under which the appellant operates itself, defines 'local call' as a call from the subscriber's line to any other line on any exchange within the same exchange system. The 'exchange system' has been defined as any department telephone exchange or exchanges and any line connected therewith declared by the telegraph authority to be an exchange system. There is an individual telephone exchange and a number of exchanges are grouped together as an exchange system. Calls can be made from within the exchange or to other exchanges within the exchange system or to lines connected to other exchange systems. I....
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....ve with intent to evade payment of service tax. However, from the SCN, the intention to evade payment of service tax is not very evident. No doubt the appellant has wrongly availed exemption notification 03/94 (ST) in respect of these services and as the department dealing with the telephones, the appellant should have known better than anybody else what local calls are. They should also have known that they have enlarged the scope of the public telephones to make calls to mobiles and to the entire state of Andhra Pradesh. They should have paid duty on these services and they have failed to do so. However, the intention to positively suppress this information and evade service tax is not evident from the SCNs or from the impugned order. The....