Honey Well Technology Solutions Lab Private Limited Vs Commissioner of Central Excise and Service Tax (CESTAT Bangalore)
As regards the ‘Telecommunication Service’, it is undisputed fact that the service provider is located outside India in respect of service received from M/s. AT & T and Genysis through data link / leased circuit. As per the definition of Telecommunication Service in Section 65(105)(zzzx) of the Finance Act, 1994, the taxable service means any service provided or to be provided to any person by the Telegraph Authority in relation to ‘Telecommunication Service’, In the present case, the service provider is located outside India. He cannot be treated as Telegraph Authority as Telegraph Authority has to be recognised by an authority of law prevailing in India, therefore, service provider cannot be treated as Telegraph Authority. Accordingly, the condition of the definition is not satisfied. In the facts of the present case, service is provided by a foreign entity will not fall under the definition of ‘Telecommunication Service’. Therefore, the appellant is not liable to pay service under Reverse Charge Mechanism.
From the decision of CESTAT in TCS E-Serve Ltd. Vs. Commissioner of Service Tax, Mumbai: 2014 (33) STR 641 (Tri.- Mumbai), we find that the issue is absolutely identical and the Tribunal held that the foreign service provider being not covered under the term ‘Telegraph Authority’, the service provided by them will not fall under the definition of ‘Telecommunication Service. Accordingly, respectfully following the above decision, we are also of the view that in the present case since the service provider is not a Telegraph Authority and the appellant being a service recipient cannot be fastened with service tax demand under Telecommunication Service. Accordingly, the demand on Telecommunication Service is also not sustainable and the same is set aside.
FULL TEXT OF THE CESTAT BANGALORE ORDER
The brief facts of the case are that the appellant is wholly owned subsidiary of Honeywell International Inc. (hereinafter referred to as HII).
The appellant is engaged in the business of development and export of Software and Information Technology enabled support service and other auxiliary and support services to HII in the filed of Aerospace, Automation and Control Solutions, New Product Development, IT Service and Solutions in terms of an Assignment Agreement dated 1.1.2003.
2. The appellant in terms of an arrangement had received leased circuit service from M/s. AT & T and Genysis through data link. This data link/leased circuit of M/s. AT & T / Genysis allowed the appellants to access the servers located abroad for which specific amount was paid by the appellant periodically based on invoices issued. On this service, the demand was confirmed under the head of Telecommunication Service for the period from April 2007 to March 2011.
2.1 The agreement was entered into between HII and the appellant on 1.1.2007 effective from 1.4.2003 with an objective to secure the services of managerial and technical personnel to assist the appellant in its business. The terms and conditions stipulated in Assignment Agreement are summarily as follows:
