Bharti Airtel Ltd Vs Commissioner of Central Goods & Service Tax (CESTAT Chandigarh)
Bharti Airtel Ltd., engaged in providing taxable services including telecommunication services, offered an “Airtel Employees Services Scheme” under which employees received a Call Free Allowance (CFA) for mobile and fixed-line telephone connections. The allowance was available to employees within prescribed monthly limits, while excess usage was collected with applicable service tax. In certain circumstances, excess usage related to official work could also be waived with approval.
Following an audit of the appellant’s Karnataka circle, the Department issued show cause notices proposing service tax on the CFA waiver granted to employees. After Airtel obtained centralized registration at Gurgaon, a further show cause notice dated 23.04.2010 demanded service tax of Rs.118,70,19,472 for October 2004 to 2009, along with interest and penalties. Periodical notices were subsequently issued for October 2009 to September 2010, October 2010 to March 2016 excluding 2012-13, April 2012 to March 2013, and April 2016 to June 2017. Demands were confirmed for certain periods, while proceedings concerning the April 2016 to June 2017 period were dropped.
Airtel appealed against the confirmed demands and penalties, while the Revenue appealed against the quantum of penalty in one matter and the dropping of a demand of Rs.3,13,50,081 in another. Airtel submitted that the issue had already been decided in its favour by the same Bench in Final Order No.60102/2025 dated 27.01.2025, as amended by Misc. Order No.60436/2025 dated 27.03.2025.
