TaxTMI 
TaxTMI 
2022 (9) TMI 626
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.... the Finance Act, 1994 [the Finance Act], and after holding that the extended period of limitation contemplated under proviso to sub-section (1) of section 73 of the Finance Act was correctly invoked. 3. Intelligence was gathered by the Officers of the Directorate General of Central Excise Intelligence that various internet service providers [ISPs] including MTNL, Delhi had entered into 'Peering Arrangements' with each other for carrying internet traffic on each other's backbone, but they were not discharging service tax on the value of services provided to other internet service providers, even though service rendered to other ISPs was covered under 'internet telecommunication service'. Accordingly, a show cause notice was issued to MTNL, Delhi and by an order dated August 28, 2015, the demand of service tax was confirmed. The Commissioner in the impugned order observed as follows : "17.6 As already stated above, MTNL has entered into a 'Peering Arrangement' with other Internet Service Providers (ISPs) for carrying Internet Traffic on each other's backbone. Peering is the arrangement of traffic exchange between Internet service providers (ISPs). Larger ISPs, with their....
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....y MTNL from M/s NIXI would become the consideration as well as the gross value of the taxable service on which Service Tax would be liable to be paid by MTNL. Since the settlement amount is the difference between the amounts receivable for services rendered minus the amounts payable for service received, hence, the entire amount receivable by MTNL for the services rendered to M/s NIXI is deemed to be the consideration in the instant case, on which Service Tax needs to be discharged, irrespective of the fact that the said consideration amount was not received by them in case. 19. Hence, in view of the above, I am of the considered view that in the instant case, all prerequisite for coverage under Service Tax, namely, event of provision of taxable service [services of internet telecommunication services falling under Section 65(57a) of the Act ibid); presence of service provider [MTNL] and service recipient [NIXI]; and the act of rendering taxable service against commercial consideration, are clearly present in the instant case. Thus, the said services are taxable in the hands of MTNL and MTNL is therefore, liable to pay Service Tax of the gross value of the said taxable ser....
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....clear that liability to pay service tax arises from the date an invoice is raised by the service provider to the service recipient. The fact of the matter is that the invoice in this case had been raised on M/s. NIXI on 10.09.2013 post Point of Taxation rules came into force. Hence the relevant date for payment of service tax becomes the date of invoice, and therefore, in our considered view, the service tax is payable by the appellant since the date of issue of invoice. 7. In view of the above discussion, we hold that so far as the liability of payment of service tax amounting to Rs. 70,93,529/- along with interest as per the provisions of section 73 and 75 of the Finance Act, 1994 is certainly leviable on the appellant. We, therefore, do not find any shortcomings or legal inconsistency in the impugned order in original and we uphold the order in this regard." [emphasis supplied] 5. On the other hand, the learned Member (Judicial) after recording disagreement with the view recorded by the learned Member (Technical), noted that the transaction is between the two and more ISPs and NIXI is only a facilitator. NIXI is, therefore, neither a service provider nor a service recei....
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....ination by the third member :- 1. As held by the Member Judicial that the appellant is not liable to pay service tax on their invoice raised on NIXI, as the NIXI is not the ISP and hence, neither the service provider nor the service receiver, hence not liable to pay service tax under the Finance Act, 1994. OR As held by the Member Technical that the appellant is liable to pay service tax on the services provided to the other ISPs through NIXI, and they have raised invoice for such services provided, on NIXI, and have also admitted to pay service tax." 7. When the matter was taken up, a preliminary objection was raised by Shri Harshvardhan, learned authorized representative appearing for the Department that as the learned Member (Judicial) has not given any reason for differing with the findings recorded by the learned Member (Technical), and there is no discussion on the findings recorded by the learned Member (Judicial), the reference to the Third Member is not maintainable. In support of this contention reliance was placed by the learned authorized representative on the following decisions : (i) Colourtex vs Union of India [2006 (198) ELT 169 (Guj.)]; (ii) Commi....