2023 (3) TMI 332

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....sed Circuit Service' (upto 31 May 2007) and there after 'Telecommunication Service', having been provided by an entity not qualifying to be a Telegraph Authority, whether liable to service tax? 1.1 Since the Appellant would be entitled for Cenvat credit of alleged service tax liability and also refund of it, will the demand for extended period be sustainable and penalties imposable on the ground of revenue neutrality? Brief Facts: 2. The Appellant is a subsidiary of Qualcomm Inc. USA. The said Qualcomm Inc USA has entered into a Master Service Agreement with a group entity 'Verizon Inc' located outside India for providing telecom bandwidth and telephone related services for all its affiliated entities across the globe. The Appellan....

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....d 28.03.2012. Being aggrieved the appellant is before this Tribunal. Submissions 6. Learned Counsel inter alia urges that at the outset it is submitted that the SCN proposes to levy service tax under the category of 'Internet Communication Service'. The said services were brought into the service tax ambit only with effect from 16.05.2008. Therefore, the present demand to the extent it covers the period from 01.10.2006 till 15.05.2008, will not be liable to service tax. 7. Without prejudice to the above, under section 65(57a) of Finance Act, 1994, "Internet telecommunication service" includes, - (i) Internet backbone services, including carrier services of internet traffic by one Internet Service Provider to another Internet S....

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....r a telegraph circuit; private network services including provision of wired or wireless telecommunication link between specified points for the exclusive use of the client; data transmission services including provision of access to wired or wireless facilities and services specifically designed for efficient transmission of data; but does not include service provided inter alia by any person in relation to internet telecommunication service referred to in subclause (zzzu) of clause (105). 10. The term leased circuit under Section 65(60) of the Finance Act, 1994 on the other hand means a dedicated link provided between two fixed locations for exclusive use of the subscriber and includes a speech circuit, a data circuit or a telegraph ci....

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....ed from Verizon Inc USA are used by the Appellant for providing taxable output services. Further, the Appellant being a 100% Export Oriented Software Technology Park Unit, it would be entitled for refund of any such unutilized service tax paid on its input services. Thus, there exists a direct case of revenue neutrality. In this situation, invocation of extended period and levy of penalties including mandatory penalty is not be justified. 14. The Appellant relies on the following judgements: (a) J.P.P. Mills Pvt. Ltd. vs Commissioner of Central Excise, Salem, 2016 (46) S.T.R. 317 (Tri. - Chennai) (pg no. 23 of compilation) (b) Nirlon Ltd. vs Commissioner of Central Excise, Mumbai, 2015 (320) E.L.T. 22 (S.C.) (pg no. 26 ....

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.... provider located outside India, revenue had demanded service tax on the .said service tax under RCM in terms of Section 66A for the "Leased Circuit"/"Telecommunication service" received from M/s Verizon Communications Singapore Pte Ltd. This Tribunal held that service tax liability does not arise under Section 66A of the Finance Act, if service is not specified under Section 65(105) of the Finance Act. The Tribunal relied on the ruling of Hon'ble Andhra Pradesh High Court in Karvy Consultants Ltd. 2006 (1) S.T.R. 7(A.P.), wherein the question involved was levy on service of banking & financial transaction under taken by Karvy Consultants Ltd, which was registered as NBFC, but their principal business was not of receiving deposit/lending. T....