ORDER
M.V. Ravindran, Member (J)
1. This stay application is directed towards the confirmation of demand and imposition of penalty along with interest payable on such confirmed demand. Since the issue involved in this case is covered by the decision of the same Bench, we grant the waiver of pre-deposit of the amounts involved and take up the appeal itself for disposal.
2. Considered the submissions made at length and perused the records. We find that the service tax demand in this case has arisen out of the fact that the assessee is also providing services of interconnectivity to other cellular operators/mobile operators and basic telephone service providers for interconnecting their customers with the customers of other cellular operators and mobile operators. They issue the bills/invoices for these interconnectivity usage charges and are collecting charges for the same and this service is a taxable service under Section 65 of the Finance Act, 1994 under the category of ‘Leased Circuit Services’.
3. On perusal of records, it is clear that the service tax demand has been made from the appellant on the ground that the interconnectivity charges as collected by them from other cellular/mobile operators falls under the category of ‘Leased Circuit Services’. The finding of the adjudicating authority is holding that such interconnectivity charges collected would fall under the ambit of service tax liability.
4. We find that an identical issue in respect of Fascel Ltd. v. CST, Ahd 2007 TIOL 208 CESTAT-AHM was before this Bench and the Bench has held as under:
6. We carefully considered the rival submissions. To enable the subscribers of one telecom authority to access the subscribers belonging to other telecom authority there has to be inter connection between the telecom authorities. These interconnection/link could be provided by way of a cable; optical fibre, radio frequency or through a satellite link. Therefore, it can be concluded that there is interconnection between the appellant company network and the network of other telecom operators. In some cases admittedly there are circuits linking such networks of different telecom authorities. Between appellant company and Reliance Infocomm Limited, it is stated that Reliance Infocomm Limited only has provided the necessary interconnection/ link facility. In such a situation since the circuit belongs to Reliance Infocomm Limited the question of appellant company leasing the circuit to Reliance Infocomm and consequently the appellant company collecting any charges cannot arise. Further, in this case the link is used not only for calls terminating with the appellant company but the link is also used for the purpose of calls emanating from the appellant company but the link is also used for the purpose of calls emanating from the appellant company to the subscribers of Reliance Infocomm. It is also not disputed that the charges for calls emanating from the appellant company to the subscribers of Reliance Infocomm are payable by the appellant company to Reliance Infocomm. Similarly charges at identical rates are payable for calls terminating at the subscribers of the appellant company from the subscribers of Reliance Infocomm to the appellant company by Reliance Infocomm. If the IUC charges collected by the appellant company from Reliance Infocomm is treated as towards “leased circuit” services provided by the appellant company, as held by the Commissioner, the question of appellant company paying IUC charges on identical rates to Reliance Infocomm should not arise.
7. Similar is the arrangement between the appellant company and other telecom authorities. The charges of 30 paisa for every pulse (each call is measured in terms of number of pulses for the purpose of calculating charges) by the concerned telecom authority is irrespective of who owns or established the link or circuit. This goes to show that the charges calculated can not be merely for the purpose of using the connecting circuit between two telecom authorities.
8. When a call for one telecom authority is made to a subscriber belonging to another telecom authority the caller makes the full payment for the call to the first telecom authority. However, for the purpose of establishing contact with his counter part he avails the facilities of his own telecom authority and the telecom authority of the terminating subscriber.
The subscriber of one telecom authority has no brevity of contract of contact with the other telecom authority. There is an internal arrangement only between one telecom authority and the other telecom authority and the charges for use of facilities of terminating calls of any telecom authority is being paid by the originating telecom authority.
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11. Therefore, the following emerges:
a. That no telegraph authority can be treated as subscriber of another telegraph authority in relation to the link established between one telegraph authority and another telegraph authority;
b. The IUC charges collected by each telecom authority for the calls terminating to the subscribers under them emanating from other telecom authorities can not be treated for use of “leased circuit”.
c. No telegraph authority can be held to be providing a dedicated link to the subscriber in the network of another telecom authority during the duration of a call between his subscriber and the subscriber in the terminating telecom authority.
d. No grounds have been adduced to hold the charge of @ 30 paisa per pulse collected by the appellant in respect of calls terminating at their end is towards so called leased circuit service. Therefore, the charges collected by them can not be treated as towards the services rendered as leased circuit services.
5. The issue now stands squarely covered in favour of the appellant by the decision of the Tribunal in the case of Fascel Ltd. Accordingly, following the said judgment, we set aside the impugned order and allow the appeal.
(Dictated and pronounced in open Court)