S.T. Circular No.46/09/2002


Government of India

Ministry of Finance & Company Affairs

Department of Revenue

Central Board of Excise & Customs

 8th August, 2002.

 Subject: Services provided by BSNL to basic/cellular telephone service providers – regarding.

I am directed to say that doubts have been raised regarding recovery of service tax on certain services provided by Bharat Sanchar Nigam Ltd. (BSNL) to Basic Telephone Service Providers (BSTP) and Cellular Mobile Service Providers (CMSP). References have been received from the Cellular Operators Association of India, New Delhi, and the Department of Telecom (DOT). The services relating to which doubts have been raised are the following:


“Inter-connection link charges”. These are charges relating to interconnectivity provided between the basic / cellular telephone providers and the BSNL/MTNL exchanges. This enables the private basic telephone operators or the mobile service providers to access BSNL telephone lines and vice-versa. This interconnection can be through a cable owned by the BSNL; in which case a monthly/annual rent is charged. If the cable has been laid/provided by the private basic/cellular telephone service provider no rental is charged by BSNL.


Rentals for junction links”. These relate to charges for using junction links of the BSNL/MTNL from one exchange to another.


“Port charges”. These are something like entry charges for allowing access into the BSNL network.


“Infrastructure charges”. Sometimes the basic as well as cellular telephone service providers need space to keep their own equipments to facilitate the interconnectivity. This space, when provided by the DOT, a rental is covered from them by the DOT.

  1. This issue had been examined earlier in the Board on a reference received from the BSNL and a clarification was issued vide letter F.No.149/1/2000-CX.4 dt.14.3.2001 (addressed to BSNL with copies to all Chief Commissioners) that so far as BTSPs are concerned no service tax was leviable in respect of services listed at (i), (ii) and (iv) above. The clarification did not mention anything about “port charges”.

  1. It has been reported by the DOT that since Board”s clarification dt.14.3.2001 referred to BTSPs only, service tax continued to be collected by them on the same services if provided to the CMSPs.

  1. The matter has been examined in the Board. So far as the above 4 services are concerned, no difference can be drawn between BTSPs and CMSPs.
  1. It is clarified that in respect of services listed at (ii), (iii) and (iv), above no service tax is presently leviable.
  1. So far as “inter-connectivity linked charges” are concerned these are nothing but charges for providing “leased circuits”. This service (leased circuits) has been brought under the coverage of service tax w.e.f. 16.7.2001. While issuing Board”s clarification dt.14.3.2001 it was inter-alia intimated that this service was not taxable. However, since “leased circuits” have become taxable. However, since “leased circuits” have become taxable w.e.f. 16.7.2001 only, Board”s clarification dt.14.3.2001 stands modified accordingly.
  1. In short, no service tax is leviable in respect of services listed at (ii), (iii) and (iv) above both for BTSP”s and CMSP”s. However, service tax is leviable w.e.f. 15.7.2001, on “inter-connection linked charges” recovered by BSNL from BTSP”s as well as CMSPs.
  1. Field formations may be suitably informed.
  1. Suitable trade notice may be issued for the information of the trade.
  1. Receipt of this Circular may please be acknowledged.

11. Hindi version will follow.

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Category : Service Tax (3394)
Type : Circulars (7812) Notifications/Circulars (32219)

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