N KRISHNA DEVARAYA Vs. UNION OF INDIA

JUDGEMENT

(1.) The question that precisely falls for consideration in this batch of writ petitions is as to whether the petitioners being pay-phone licensees are required to collect service tax and pay the same to the credit of the Central Government under and in accordance with the provisions of Chapter- V of the Finance Act, 1894 (1994) (hereinafter 'the Act'); and if they are so required, whether the service tax so collected has to be deposited with the respondent-telephone authorities or to be deposited under and in accordance with the provisions of the Act and the Service Tax Rules, 1994 (in short, the Rules).

(2.) Admittedly the writ petitioners are licensees of pay-phone i.e, STD / PCO. Such licences are granted under Section 4 of the Indian Telephones Act, 1985 (hereinafter referred to as 'the Telephones Act') to instal, maintain and operate telephones within the agreed locations. Under the terms of the licence the licensor has been authorised to collect from the callers the charges at the rate prescribed from time to time by the Government. Out of these charges, for the services rendered by him, he (licensee) is entitled to commission at the rate prescribed under the terms of licence.

(3.) The concept of 'service tax' is comparably a new one to this country, since it is for the first time that such tax has been levied by the Parliament pursuant to its powers under the residuary entry No.97 of List-I of the Seventh Schedule to the Constitution of India. Provisions levying service tax have been brought into force with effect from 01-07-1994 pursuant to a Notification No. 1/94 dated 20th June, 1994 issued by the Central Government in accordance with Section 64(2) of the Act.