BHARTI AIRTEL LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The present writ petition be numbered as an appeal under Section 35G of the Central Excise Act, 1944. This is so because the order passed by the Customs Excise Service Tax Appellate Tribunal dated 11.04.2013 is under challenge. The learned counsel for the petitioner (now appellant) undertakes to deposit the differential court fees within two days.

(2.) The appellant is aggrieved by the said order dated 11.04.2013 passed by the Tribunal, whereby the Tribunal has directed the appellant to make a pre-deposit of a sum of Rs. 80 crores out of a tax demand of Rs. 118,70,19,472/- as also a penalty in the amount of Rs. 125 crores. The Tribunal has directed that if the said deposit of Rs. 80 crores is made within the stipulated time, the realization of the balance tax demand of Rs. 38.78 crores as well as penalty of Rs. 125 crores and interest on the service tax demand shall be stayed during the pendency of the appeal or till 03.12.2013 whichever date is earlier.

(3.) The entire controversy in this appeal relates to the issue of chargeability of service tax on the free calls which are provided by the appellant to its employees. According to the revenue, if the employees had not been granted the facility of free calls, they would have paid for them and consequently, service tax would have been collected by the revenue on such payments. The fact that the appellant has given this facility of free calls has translated into a deprivation of the service tax to the extent of the free calls provided by the appellant to its employees. On the other hand, Mr Kaul, the learned senior counsel appearing on behalf of the appellant, submitted that it had an excellent prima facie case inasmuch as service tax can only be collected on the amount charged by the service provider for rendering the service. Any service which is provided free of charge cannot be the subject matter of service tax. He has also placed reliance on a Circular dated 13.10.1997 issued by the Central Board of Excise and Customs by way of a clarification. In respect of question No. 4 contained in that circular, the CBEC has clarified that the value of taxable service in relation to a telephone connection provided to a subscriber is the gross total amount received by the Telecom Authority from the subscriber. It has, further, clarified that in case the service is provided free and no amount is received by the Telecom Authority, the question of service tax liability does not arise.