TaxTMI 
TaxTMI 
2023 (9) TMI 68
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....nication Services, Business Auxiliary Services, Intellectual Property Services, etc. They are registered with the Service Tax Department and are filing ST-3 returns periodically in terms of Rule 7 of the Service Tax Rules, 1994. 5. On scrutiny of records, it was noticed by the Department that the appellant had provided roaming services to international inbound roamers and that the appellant received income for rendering such services from the home network of the visitors. It was observed that the appellant had not paid Service Tax on the international inbound roaming charges for the period from July 2012 to September 2013. On enquiry, the appellant informed that they have received income in foreign currency for rendering such services and that the services rendered by them qualify as 'export of services' in terms of the Export of Services Rules, 2005. According to the Department, the appellant charged an amount for 'international roaming' from their partner foreign network operators [for latter's customers while roaming in the taxable territory (India)]. Since these services were provided in India by the Indian service provider and consumed in the Indian taxa....
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....und roamer, who is the 'actual beneficiary' of the appellant's services. The Department has taken the view that the FTO is merely a co-ordinator who arranges for the services to the inbound roamer; that the FTO would not become the service recipient merely because payments are made by the FTO to the appellant in convertible foreign exchange. That the authorities below have taken the view that the transaction would not amount to 'export of services' for the period from July 2012 to September 2013 because the service recipient (inbound roamer) is located in India for the entire duration when the roaming services are rendered. That the service is provided within India to the inbound roamer as per Rule 3 of the Place of Provision of Services Rules, 2012 ('POPS Rules'). It is concluded by the Department that the activity cannot be treated as an export of service under Rule 6A of the Service Tax Rules, 1994 because the conditions in Rule 6A(d) of the Service Tax Rules are not satisfied as the place of provision of service is within India. 7.3 She submitted that the Tribunal in the appellant's own case for the very same set of facts and issue, as reporte....
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....e claims for the Service Tax paid on international inbound roaming services on the ground that these amounted to export of services in terms of Rule 5 of the Export of Services Rules, 2005 read with Notification No. 11/2005-S.T. dated 19.04.2005. That though the rebate claims were rejected by the Original Authority, the appellant had preferred a Revision Application before the Government of India. After adjudication, the Revisional Authority allowed the rebate claims, which would establish that provision of international inbound roaming services is in the nature of export of services. 7.6 She argued that all these facts have already been considered by the Tribunal in the appellant's own case and the Tribunal has set aside the demand for the earlier period as well as subsequent periods. That the present dispute, which pertains to the period from July 2012 to September 2013, is the period sandwiched between the periods of dispute in the earlier cases. 7.7 She prayed that the appeal may be allowed. 8. Smt. Sridevi Taritla, Learned Authorized Representative for the Revenue, supported the findings in the impugned order. 9. Heard both sides. 10. The facts have already ....
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...... 5.1 The issue is whether the appellants are liable to pay service tax on the international inbound roaming services received by a subscriber of foreign telecom company who visits India. It is not in dispute that the appellant had received consideration from the foreign telecom company for providing such international roaming. In other words, department does not have a case that consideration as received by the appellant from the person who was on visit in India and was receiving services from appellant as a subscriber of foreign telecom company. The international inbound roamer is not a subscriber of the appellants. The department has proceeded with the view that the actual beneficiary of the service is the inbound roamers and the appellant being a service provider for such international roaming facility, the service would fall within the levy of service tax. In fact, even though the actual beneficiary of the service is inbound roamer, there is no agreement by the appellant to provide service to the actual inbound roamer. The agreement to provide service is between the appellant and the foreign telecommunication company. Thus, for the appellant, the service recipient ca....
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....that the technical issues including the scope and classification of taxable services, valuation of taxable services, export of services, services received from outside India also fall within the scope of the master circular. Further, in the case of Verizon Communication India Pvt. Ltd. (supra), the Hon'ble Delhi High Court had considered the issue whether the master circular supersedes the earlier circulars. The Hon'ble High Court had concluded that the circular dated 23.8.2007 makes it explicit that all circulars, instructions and communications issued from time to time stand superseded by the Master Circular. The relevant paragraph is extracted below:- "42. Circular No. 90/1/2007, dated 3rd January, 2007 concerned provision of telephony services to subscribers of international telephone service providers who may be on a visit to India and are availing the inbound roaming services. The said Circular clarified that a telephone connection did not necessarily mean providing a telephone instrument or providing sim card. Even if a number was allocated temporarily to an inbound roamer and used internally it remained a service of a telephone connection. It was clarified that dur....
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....ommunication India Pvt. Ltd. (supra), we find that the master circular supersedes the earlier circulars issued by the Board and therefore the contention of the department that Circular dated 3.1.2007 has to be applied for levy of service tax is not sustainable. 5.6 The ld. counsel for appellant has also furnished the order passed by the revisionary authority in their own case vide order No.01-05/2018-ST/ASRA/Mumbai dated 23.1.2018. It is submitted by the ld. counsel that the appellant was earlier paying service tax on these services and claiming refund / rebate. In such proceedings, wherein the refund claim was filed by the appellant after paying service tax, the revisionary authority has granted the refund after considering all the circulars as well as the decision in the appellant's own case and the case of Verizon Communication India Pvt. Ltd. (supra). Paragraphs 15 and 16 of the said revisionary order makes it clear that the revisionary authority has taken note of all the circulars of the Board as well as the decisions relied upon by the appellant to grant the refund for the period prior to 1.4.2011. After 1.4.2011, appellant stopped paying the service tax for which sh....
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.... Rules, the location of the service recipient has to be taken into account for deciding as to where the services have been provided. So for the entire period of dispute, since the service recipient is outside India, the same amounts to export of services." Apart from this para, I do not find any discussion in the said order in respect of the provisions of law and facts for the period post 01.07.2012. The entire order discusses the issue vis a vis the master circular issued by the Board dated 23.08.2007, withdrawing/ superseding the earlier circulars including the Circular No. 90/1/2007 dated 03.01.2007. On the basis of the decision of the Hon'ble High Court of Delhi in case of Verizon Communication 2017-TIOL-1863-HC-Del-ST, has concluded in para 5.5, that Master Circular has superseded the earlier Circulars and Circular 03.01.2007 cannot be applied. 1.2 Tribunal thereafter has referred to the order of Government of India, Order No order No. 01-05/2018-ST/ASRA/Mumbai dated 23.1.2018, whereby the Government has allowed the refund/ rebate claims filed for the period prior to 01.04.2011, as they were paying service tax on the said services provided by ....
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....rvice. I find that this method of payment is dictated by convenience and not a legal requirement. ... ... ... 15. If Vodafone's argument that the inbound roamer is not the service recipient is to be accepted, then there is no need for the Central Government to issue the above notification at all. "When a notification is issued by an executive authority in exercise of a power conferred by statute that notification is as much a part of the law as if it had been incorporated within the body of the statute at the time of its enactment", quoted the Supreme Court in the case of East India Commercial co Ltd [1983 (13) ELT 1342]. The very issue and wordings of the above notification (emphasized above in bold) prove that the Service Tax law considers the inbound roamer not the foreign telecom operator - as the service recipient. The notification had waived the non-collection of tax for the period up to 14-01-2007 only. This aspect has been clarified by the CBEC in its Circular No. 90/1/2007-S.T. dated 03-01-2007, wherein it was noted that: "During international roaming, the visiting network provides service to a person treating him as a subscriber on a t....
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....rms of Rule 6A of the eService Tax Rule, 1994 and hence not liable to tax. I find that Vodafone has not fulfilled condition (d) of Rule 6A (1) ibid, which reads as follows : "the place of provision of the service is outside India. I have already given my findings that the place of provision is within the taxable territory and therefore I find that this condition is not satisfied by Vodafone. Therefore, the impugned services provided by them cannot be considered as 'export of service'. In any case, I may point out here tat Rule 6A ibid does not provide any exemption for export of services. This Rule merely enables the government to issue notification for the purpose of granting rebate of excise duty / service tax paid on inputs / input services used in providing services which are exported. Hence, I hold that Rule 6A of the Service Tax Rules, 1994 does not provide any relief to Vodafone in the present proceedings." 1.4 The finding of the Commissioner to that effect have not been considered and set aside by any authority. The finding of fact rendered by the Commissioner in respect of the manner of provision of the services clearly indicate that inland roaming services to t....
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....s. HPMN and VPMN The Home Public Mobile Network is the network from the operator by which a mobile subscriber has a subscription. The term is used as opposed to Visited Public Mobile Network (VPMN). The Visited Public Mobile Network is the network used by a mobile subscriber while roaming. The term is used as opposed to Home Public Mobile Network (HPMN). Clearing House There are well known bodies like MACH who interface between different roaming partners to help them to exchange their CDRs, setting up roaming agreements and resolving any dispute. Clearing houses receive billing records from one roaming partner for the inbound roamers and submit billing records to another roaming partner for which this roamer would be called outbound roamer. What is TAP3? Transferred Account Procedure version 3 (TAP3) is the process that allows a visited network operator (VPMN) to send billing records of roaming subscribers to their respective home network operator (HPMN). TAP3 is the latest version of the standard and will enable billing for a host of new services that networks intend to offer their customers. Cl....
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....ailable and assessed by me on webpage: https://www.gsma.com/publicpolicy/wp-content/uploads/2012/10/GSMA-Information-Paperon-International-Mobile-Roaming-for-ITU-T-Study-Group-3-FINAL.pdf, assessed on 25.08.2022. The relevant excerpts explaining the concept of international roaming, and the role of all the players is explained as follows: 2. What is IMR? International Mobile Roaming (IMR) is a service that allows customers to seamlessly continue to use their mobile phone or other mobile device, to make and receive voice calls and text messages, browse the internet and receive emails, whilst visiting another country. IMR effectively extends the coverage of a roaming customer's home operator's retail voice and SMS services, allowing the customer to continue to use their home operator phone number, and data services while in another country. This seamless extension of coverage is enabled by a wholesale roaming agreement between a roaming customer's home operator and the visited network in the visited country, which addresses the technical and commercial components required to enable the service. IMR is one service offered to consumers....
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.... have been granted access automatically to the Visited Operator A network in the visited country when you arrived as a result of data provided by your home to the visited operator confirming that you are a roaming customer. The wholesale roaming agreement specifies how this data is to be provided to the visited operator. Your home operator is likely to have wholesale roaming agreements with more than one operator (i.e Operators A and B) in the country you are visiting. As a result of the wholesale roaming agreement, you can make a call back home using the Visited Operator's network, which in turn uses international transit services to carry the call back to your home country. 2. You pay a retail price to your Home Operator for the IMR service and pay nothing to the Visited Operator A Your friend does not incur any charges for receiving a call from you while you are roaming. 3. The Visited Operator A sends Transferred Account Procedure (TAP) files to a Clearing House which forwards them to your Home Operator. TAP files are used for billing of calls while roaming. 4. Your Home Operator can then pay Visited Operator A wholesale charges as per call volume....
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....sing the bill on him. 1.8 In view of the discussions as above I am of the view that findings of the Commissioner in the impugned order in respect of the location of service provider and service recipient to be in accordance with the available technical literature on the subject and the same cannot be faulted with. In view of the above finding the question of law as to the services provided by the appellant to international roamer will be export of services or not needs to be considered. 1.9 The decisions relied upon by the appellant are for the period prior to 01.07.2012, and hence shall have no applicability to the present case which is for the period after introduction Place of Provision of Services Rules, 2012. 1.10 In the present appeal we are concerned with the period after 01.07.2012 (i.e. July 2012 to September 2013). In my view the issue needs to be reconsidered for the period in respect of the of the period post 01.07.2012 on the basis of the Place of Provision of Service Rules, 2012 and Education Guide 2012 issued explaining the said provision. The decision relied upon by the Appellant and Hon'ble Member (Judicial) in her order has been passed without conside....
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....ption is elsewhere, and services are taxed on their importation into the taxable territory. However, this determination is not easy. Services could be provided by a person located at one location, actually performed at another while being delivered to a person located at a third location, and occasionally actually consumed at a third location or over a larger geographical territory, falling in more than one taxable jurisdiction. For example a person located in Mumbai may buy a ticket on internet from a service provider located outside India for a journey from Delhi to London. On other occasions the exact location of service recipient itself may not be available e.g. services supplied electronically. As a result it is necessary to lay down rules determining the exact place of provision, while ensuring a certain level of harmonization with international practices in order to avoid both the double taxation as well as double nontaxation of services. It is also a common practice to largely tax services provided by business to other business entities, based on the location of the customers and other services from business to consumers based on the location of the service provide....
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....vice will be deemed to be provided in the taxable territory and service tax will be payable, B. However if the receiver is located outside the taxable territory, no service tax will be payable on the said service. 5.3.2 If the place of provision of a taxable service is the location of service receiver, who is the person liable to pay tax on the transaction? Service tax is normally required to be paid by the provider of a service, except where he is located outside the taxable territory and the place of provision of service is in the taxable territory. Where the provider of a service is located outside the taxable territory, the person liable to pay service tax is the receiver of the service in the taxable territory, unless of course, the service is otherwise exempted. Following illustration will make this clear:- A company ABC provides a service to a receiver PQR, both located in the taxable territory. Since the location of the receiver is in the taxable territory, the service is taxable. Service tax liability will be discharged by ABC, being the service provider and being located in taxable territory. However, if ABC were to su....
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....cash or through debit and credit note between the business and fixed establishments, it is clear that the payment is being made by a geographical location. Wherever a fixed establishment bears the cost of acquiring, or using or consuming a service through any internal arrangement (normally referred to as a "recharge" "reallocation", or a "settlement"), these are generally made in accordance with corporate tax or other statutory requirements, These accounting arrangements also invariably aid the MLE's management in budgeting and financial performance measurement. Various accounting and business management systems are generally employed to manage, monitor and document the entire purchasing cycle of goods and services (such as the ERP Enterprise Resource Planning System). These systems support and document the company processes, including the financial and accounting process, and purchasing process. Normally, these systems will provide the required information and audit trail to identify the establishment that uses or consumes a service. It should be noted that in terms of proviso to section 66B, the establishments in a taxable and non-taxable territory are to be....
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....ctions under which services are provided:- a) Under the global agreement, some component of IT service is provided by BBB to AAA in country A (say, Transaction 1). b) To meet the requirements of providing IT solutions specific to the plants AAA-X and AAA-Y in countries X and Y, BBB enters into agreements with its subsidiaries BBB-X (in country X) and BBB-Y (in country Y), under which they provide IT services to BBB (say, Transaction 2 and Transaction 3). Though these services are provided by BBB-X and BBB-Y to BBB, these are rendered as under:- • By BBB-X to AAA-X (in country X)- under transaction 2, and • By BBB-Y to AAA-Y (in country-Y) under transaction 3. c) AAA enters into separate agreements with AAA-X and AAA-Y under which AAA Ltd provides IT services to them (transaction 4 and transaction 5). The transactions and provision of service under each are illustrated in the Flow diagram F2 titled 'Scenario 1' at the end of this section. Scenario 2 [See Flow Diagram F 3 at the end of this section] AAA enters into a Framework Agreement with BBB for provision of IT services for the whole group. The Framewo....
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....being provided and the service is delivered to the international roamer directly without any modification by the Home Network. The role of the Home Network is nothing but of an intermediary in the entire scheme for provision of the service. Intermediary is defined as per Rule 2 (f) of the Place of Provision of Service Rules, 2012 as follows: "(f) "intermediary" means a broker, an agent or any other person, by whatever name called, who arranges or facilitates a provision of a service (hereinafter called the 'main' service) or a supply of goods, between two or more persons, but does not include a person who provides the main service on his account. , " And Rule 9 of the said Rules, provide 9. Place of provision of specified services.- The place of provision of following services shall be the location of the service provider:- (a).... (b)..... (c) Intermediary services; (d).... 1.14 Thus based on the discussions as above I would concur with the view of the Commissioner in the impugned order to effect that benefit of export of services is not available in the present case. I find that the decision in the Appellants own....
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.... in the appellant's own case for the period 01.04.2011 to 30.06.2012 and 01.10.2013 to 30.09.2014, holding that service tax is not leviable on the telecom(mobile) service received by an international roamer during their visit to the country, is not a binding precedent; hence not applicable to the period in dispute i.e. from July 2012 to September, 2013, and accordingly the Appeal to be dismissed. 3. Learned Member(Judicial), referring to the earlier Order and quoting from the same extensively, has observed that the facts involved in the present case being similar, hence the said judgment is applicable to the present period also and consequently held that the appeal is to be allowed with consequential relief. 4. Recording difference with the said view, the learned Member (Technical) referring to the web page https://www.tutorialspoint.com/telecom-billing/roaming-billing.htm narrated in detail the method of working of roaming network i.e. International Mobile Roaming Service and also cited from the Education Guide circulated by the Board, after amendment to the scheme of Service Tax w.e.f. 01.07.2012, introducing the concept of negative list and notifying the Place of Pr....
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....le 2(f) of the POPS Rules, 2012. 7. In appreciating the point in issue, it is necessary to have glance of the relevant provisions made effective from 01.7.2012. The definition of "service" provided under Section 65B(44) of Finance Act, 1994 reads as follows:- (44) "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely,- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or (iii) a transaction in money or actionable claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment; (c) fees taken in any Court or tribunal established under any law for the time being in force. The charging Section 66B reads as follows:- 66B. Charge of service tax on and after Finance Act, 2012.- There shall be levied a tax (here....
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....lant. The agreement between the appellant and the FTOs have been subject matter of consideration by this Tribunal under earlier provisions and in appellant's own case reported at 2013(31) STR 738 (Tri. Mumbai) it is observed at para 5.1 as follows:- 5.1. We have perused the agreement entered into between the appellant and the foreign telecom service providers. As per the said agreement, the appellant has agreed to provide telecom services to the customer of the foreign telecom service provider while he is in India using the appellant's telecom network. The consideration for the service rendered is paid by the foreign service provider. There is no contract/agreement between the appellant and the subscriber of the foreign telecom service provider to provide any service. Since the contract for supply of service is between the appellant and foreign telecom service provider who pays for the services rendered, it is the foreign telecom service provider who is the recipient of the service. From the provisions of law relating to GST in UK and Australia, relied upon by the appellant, this position becomes very clear. Your customer's customer is not your customer. When a....
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....ant and the overseas FTO for provision of the service, when their(FTO's) subscriber visits India and uses the services during his stay in India. The consideration/payment for the service flows from the FTO to the appellant, for the said service, under an agreement, even though the beneficiary for such service is subscriber of the FTO. Thus, the FTO is the person who is legally entitled to receive the service as per the agreement, even though the beneficiary is the customer of FTO on their visit to India. Therefore, in my view, there is no change of status of the FTO, from service receiver to an Intermediary, post introduction of POPS Rules, 2012, when read in the context of the charging section 66B. The FTO who enters into a legal agreement with the appellant, for its customers to receive service during the Customers' visit to India and accordingly obliged to make the payment for such service, and the Appellant agrees to provide the service, is the service receiver. Further, in my considered opinion, the FTO, in the present circumstances cannot be called as an 'intermediary', but is the actual service receiver, as per the agreement between them and the Appellant, th....