Service Tax Not Leviable On License Fee Or Spectrum Charges Payable For Period Before 1st April 2016: CESTAT

The Bench consists of S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) has stated that “as per the principle of ejusdem generis, the phrase “any other document issued by the Government demanding such payment” should only include documents of similar nature to an invoice, bill or challan. If we apply this principle, then the phrase “any other document issued by the Government demanding such payment” cannot be an agreement as considered by the department in the case because the same is not issued in the nature of an invoice, bill or challan.”

In this case, the assessee/appellant was engaged in providing taxable services i.e. Telecommunication Service by Telegraph Authority as defined in the Finance Act, 1994.

An enquiry was initiated against the assessee on the issue of short payment /non-payment of service tax on Government dues on Reverse Charge basis.

Thereafter, a show cause notice was issued to the assessee alleging short payment of service tax and proposing service tax demand amounting to Rs. 43.73 crores for the period 01.04.2016 to 30.06.2017 along with interest under Section 75 and penalties under Sections 76, 77 and 78 of the Act.

The Commissioner confirmed the demand along with interest and penalties under Sections 77 and 78 of the Act, however, penalty under Section 76 of the Act was dropped.

The assessee submitted that the additional license fee of Rs. 222.1 crores (comprising of the initially self-assessed liability of Rs. 221.4 crores plus liability of Rs. 0.73 crores over and above the initially self-assessed liability of Rs. 221.4 crores) on which service lax demand has been confirmed in the impugned order pertained to the 2G Licenses that were cancelled much before 01.04.2016, therefore, service tax was exempt on the same.

The Tribunal observed that the assessee has discharged the amounts of service tax along with cess for the period 2016-17 and 2017-18 for the services availed by them from the Government on reverse charge basis, which is duly recorded in the impugned order.

The bench noted that the entire demand has been raised on the basis of the AGR Judgment of the Supreme Court. Further, in the said AGR Judgment, the Additional License Fee was required to be paid by the telecom operators But prior to the AGR Judgment of the Apex Court, the TDSAT vide its order dated 23.04.2015, in the case of Association of Unified Service Providers of India & Others vs. Union of India [Petition No. 7 of 2003], decided that telecom operator are not liable to pay additional amount of license fee or spectrum charges to the DOT, which clearly shows that it was an interpretation issue and suppression cannot be alleged against the assessee.