Tata Teleservices Limited Vs Commissioner CGST Delhi East & Anr. (Delhi High Court)
Delhi High Court has referred Tata Teleservices Limited’s petition to the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) for adjudication on whether charging service tax on Value-Added Services (VAS) purchased using prepaid balances constitutes double taxation. The dispute arose after the Commissioner CGST, Delhi East, passed an order demanding ₹31 crore in service tax and imposing an equal penalty. Tata Teleservices argued that service tax is already paid when a customer purchases a prepaid recharge, and taxing services availed using the same balance would amount to double taxation. The company challenged the order on multiple grounds, including procedural lapses such as lack of pre-consultation and adjudication delays, as well as arguing that the demand was time-barred.
The court observed that the question of double taxation requires a detailed factual analysis of how services are provided and billed. Given that the order is appealable, the court directed Tata Teleservices to file an appeal before CESTAT. Considering the company’s financial condition, the court allowed the appeal to proceed upon depositing ₹1 crore instead of the usual 7.5% pre-deposit requirement. CESTAT will now determine whether the additional tax demand is justified or amounts to unlawful double taxation.
