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Leasing telecommunication network to another telegraph authority — Not a taxable service — Since telegraph authority not a subscriber — The definition of leased circuit — As per interpretation of statutes — Includes part — Should satisfy the conditions/requirements of means port — Hence the plea of Revenue rejected.
Facts
The appellant, a holder of infrastructure provider category II licence under first proviso to section 4 of the Indian Telegraph Act, 1885 it also provides its services to M/s. Bharti Infotech Ltd. and M/s. Data Access India Ltd., who are also registered under the said provisions. The Revenue contended that the service of leasing of telecommunication network provided by the appellant was taxable in terms of clause (zd) of s.s 105 of section 65 of the Finance Act, 1994 which defined the taxable service as: “service provided to a subscriber by telegraph authority in relation to leased circuit”.
According to the appellant, M/s. Bharti Infotech Ltd. and M/s. Data Access India Ltd., (registered under the above provisions) could not be considered as subscriber as they were telegraph author- ity. Since the service was not provided to the subscriber, the appellant was not liable to pay the service tax. The appellant relied on the decision in the case of Fascel Ltd v. Commissioner, (2007) 7 STR 595 (Tribunal). Also, a Circular issued by the CBEC 91/2/2001-ST, dated 12-3-2007 was cited. The appellant further submitted that the facility of telecommunication network provided by them to different users on a band-width-sharing basis did not come within the meaning of ‘leased circuit’.
Held
Relying on the decision in the case of Reliance Telecom Ltd. v. CST, Ahmedabad (2007) TIOL 414- CESTAT AHM, the Tribunal held that telegraph authority receiving interconnecting service cannot be considered as a ‘subscriber’. As such, the demand failed except for about Rs.7 lakh in respect of service provided to M/s. Converges and M/s. Dakshe Services, as the same were not registered as telegraph authority.
