Case Law Details
M/s Spectranet Limited Vs Commissioner of Service Tax (CESTAT Delhi)
(i) So far the first issue of levy of service tax on the monthly rentals charged by the foreign internet service provider for procuring band with, under reverse charge mechanism, we hold that such foreign internet service provider are not Telegraph authority, which is a condition precedent for levy of service tax. Admittedly, the provider of such service is not a Telegraph authority under the Indian Telegraph Act. Accordingly, we hold that no taxable service is rendered by the foreign service provider and accordingly no amount of tax is payable.
(ii) The next issue is regarding service tax on rental charge by the appellant from its customers/ subscribers towards rent of its wireless routers/ radio. Admittedly, this activity qualify as deemed sale of goods as the said activity tantamount to “transfer of right to use these goods”. Admittedly, in the transaction, the goods in question were delivered by the appellant and the effective possession and control of the goods have been given. Thus, the said activity amounts to sale, on which admittedly appellant have paid VAT / sale. Accordingly, no service tax is payable by the appellant on the rental of wireless/ router or radio.
(iii) So far the demand based on rental / lease charges (Interconnectivity charges) received by the appellant from other ISP for providing use of its optical fiber cable is concerned, it is a service provided by one Telegraph authority to another. Service Tax under the provisions of lease circuit service or telecommunication service is exigible only when service is provided by a Telegraph authority to a subscriber. This has also been clarified by the CBEC vide Circular No. B/11/1/2001-TRU and such view have also been taken by the Coordinate bench of this Tribunal in the case of Reliance Telecom (supra).
(iv) So far the demand for sale of domain name is concerned, the issue stands decided in favour of the appellant in the case of Tata Sons Limited (supra) wherein it has been held that transaction in domain name is a transaction in property in the goods and amounts to transaction of sale of goods. Domain name are akin to trade mark, making them the property of the person who owns it.
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