Whether the provision of telecommunication service to international roamers while they are in India would amount to export of service?

PJ/CASE LAW/2015-16/2668

Case-COMMISSIONER OF SERVICE TAX, MUMBAI-I versus VODAFONE INDIA LTD.

Citation-2015 (37) S.T.R. 286 (Tri. - Mumbai)

Brief Facts-The facts of the case are that there are five appeals filed by the Revenue against Order-in-Appeal No. 366 to 370 dated 20-9-2013 passed by the Commissioner of Central Excise & Service Tax (Appeals), Mumbai-IV. Vide the said order, the lower appellate authority has sanctioned the refunds of 36,44,18,798/- to the respondent Vodafone India Ltd. by allowing the respondent’s appeal and rejecting the Revenue’s appeal. The refunds were sanctioned in view of the decision of the Tribunal in the respondent’s own case reported in 2013-TIOL-566-CESTAT-MUM =2013(31)S.T.R.738 (Tri. - Mumbai) wherein it was held that the provision of telecommunication service to international roamers would amount to export of service. Aggrieved from the same, Revenue appealed in tribunal.

Appellant’s Contention-The ld. Additional Commissioner (AR) appearing for the Revenue submits that according to the Revenue, provision of roaming facility to international roamers travelling in India would not amount to export and therefore, the refunds/rebates are not permissible in law. However, when a question was put to him whether the order of the Tribunal in the respondent’s own case has been challenged and whether any stay has been obtained, he submitted that Revenue has gone in appeal on the same issue against the Tribunal’s order and no stay has been obtained against the Tribunal’s order. There is no other ground taken in the appeals filed by the Revenue as confirmed by the ld. AR, who merely reiterates the grounds urged in the appeal memorandum.

Respondents Contention-The ld. counsel for the respondent submits that this Tribunal in respondent’s own case supra had held that the service provided to customers of the foreign telecom service provider as international inbound roamers while they are in India using the respondent’s telecom network, is export of service under the Export of Services Rules, 2005 and the principles of unjust enrichment would not apply to such export transactions. He further confirms that appeal against the said order of the Tribunal has not been admitted by the Hon’ble High Court and is listed for rejection at the pre-admission stage before the Registry. Therefore, the law as interpreted by the Tribunal is the law prevailing today and therefore, the order of the lower appellate authority allowing the refund claims is clearly sustainable. Therefore, he pleads that the appeals filed by the Revenue be dismissed.

Reasoning Of Judgement-The tribunal carefully considered the submissions made by both sides. It is not in dispute that the service rendered by the respondent is the telecom service provided to customers of foreign telecom service provider as international inbound roamers while they are in India. Such services have been held to be services provided to foreign telecom service providers for which consideration has been received in convertible foreign exchange. Therefore, this Tribunal in the order cited supra held them to be export of services in terms of the Export of Services Rules, 2005 following the precedent decision of the Tribunal in the case of Paul Merchant Ltd. - 2012-TIOL-1877-CESTAT-DEL. = 2013 (29)S.T.R.257 (Tri.). Thereafter, the same ratio has been followed by this Tribunal in a series of decisions in GAP International Sourcing (I) Pvt. Ltd. v. Comm. of S.T. [2014-TIOL-465-CESTAT-DEL], Simpra Agencies [2014-TIOL-687-CESTAT-DEL = 2014 (36)S.T.R.430 (Tri.)], SGS India Pvt. Ltd. [2014-TIOL-580-HC-MUM-SERVICE TAX = 2014 (34)S.T.R.554 (Bom.)]. Therefore, in the present case also, the transaction is one of export and the appellant is rightly entitled for refund/rebate of the Service Tax paid in respect of such transactions. In view of the above factual and legal position, tribunal do not find any merit in the appeals filed by the Revenue. Accordingly, tribunal dismiss the same.
Since huge amounts of refund are kept pending, tribunal direct the Jurisdictional Asst. Commissioner to dispose of the rebate/refund claims within a period of one month from the date of receipt of this order.

Decision-Appeal dismissed

Comment-The analogy in the case is that if the assessee provides the telecom services to the international roamers while they are in India using their own telecom network then it would amount to export of services according to Export of Services Rules, 2005.And, accordingly the refund claim of the service tax paid in respect of such transactions is clearly tenable.

Prepared By-Neelam Jain

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PJ/CASE LAW/2015-16/2668

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