Commissioner of CGST & Central Excise Vs Tata Communications Limited (CESTAT Mumbai)
Summary: The appeal was filed by the Commissioner of CGST & Central Excise, Mumbai South Commissionerate against the Order-in-Original dated 06.01.2017, whereby the Commissioner of Service Tax Audit-I, Mumbai had dropped service tax proceedings against Tata Communications Limited.
Tata Communications Limited was engaged in providing International Long Distance, Enterprise Data and Internet services. For providing connectivity services, it used capacity on satellite transponders on lease basis in the form of frequency bandwidth from Foreign Satellite Service Providers (FSSPs). The respondent treated the services as “Telecommunication Services” under Section 65(109a) of the Finance Act, 1994. The department, however, considered the services to be Business Support Services (BSS), particularly infrastructural support services under Section 65(104c).
Two show cause notices were issued. The SCN dated 20.10.2011 covered 2006-07 to 2010-11 and proposed service tax of Rs.21,68,41,780, while the SCN dated 17.08.2012 covered 2011-2012 and proposed service tax of Rs.1,16,80,200, along with interest and penalties. The adjudicating Commissioner dropped the proceedings. Revenue contended before the Tribunal that provision of transponder capacity constituted infrastructural support and was taxable as BSS under the reverse charge mechanism under Section 66A. Reliance was placed on Ushodaya Enterprises Private Limited Vs. Commissioner of Customs, Central Excise & Service Tax, Hyderabad. The respondent submitted that agreements with FSSPs such as Inmarsat Global Limited, Intelsat and Thaicom Public Company Limited established that the services were telecommunication services provided through satellite infrastructure owned, leased or operated by the foreign service providers. According to the respondent, the infrastructure itself was not made available to it; rather, telecommunication services were supplied using that infrastructure. It was also submitted that BSS was a generic category and the highly technical provision of dedicated bandwidth through transponders could not be classified as BSS. Reliance was placed upon Section 65A and the CBEC clarifications dated 15.07.2011 and 19.12.2011.
