Telecommunications Consultants India Ltd. Vs Union of India & Ors. (Delhi High Court)
Delhi High Court held that the work in the nature of laying down of “Optical Fibre Cable Network” to benefit the defence forces for better communication is exempt from service tax since the ultimate beneficiary of the service is Government of India.
Facts- The respondent, Bharat Sanchar Nigam Limited [‘BSNL’],a Public Sector Undertaking floated a tender to roll out an exclusive and dedicated “Optical Fiber Cable Network” to be owned and operated by the Defence Services under the ‘NFS Project’ in different regions of the country.
The petitioner herein, a Government of India Enterprise under the administrative control of the DoT, MCIT, being one of the successful bidders, managed to secure the tender for a portion of the work for the said Project for installation of the optical fibre cable, as well as other services incidental thereto. Subsequent thereto, the BSNL raised a Purchase Order towards Supply of Material, NLD services, Access Services and Training, under the said Project, for an aggregate value of Rs. 14,48,60,76,007/-.Admittedly, clause (36) of the said PO specifically provided that „Service Tax‟ is not applicable on the said PO.
Thereafter, the petitioner herein issued separate POs to various sub-contractors for carrying out a variety of work for the NFS Project, and charged applicable service tax on its invoices for the reason that the BoQ which stood approved by way of the PO dated 09 September 2014, included a separate service tax component. However, the BSNL allegedly refused to pay the service tax amount charges on the said invoices on the ground that the services performed by the petitioner under the PO dated 09 September 2014 were eligible for exemption by virtue of a „Specific Exemption‟ provided under Entry 12A of the „Mega Exemption Notification‟ bearing Notification No. 25/2012-Service Tax dated 20 June 2012 (as amended by Notification No. 9/2016-Service Tax dated 01March 2016) notified in terms of Section 93(1) of the Finance Act, 1994 (32 of 1994).
