BHARTI AIRTEL LTD. Vs. COMMISSIONER OF SERVICE TAX

JUDGEMENT

(1.) BACKGROUND of the case: The appellant as a provider of "telecom service" had made available of such service (mobile phone, fixed line and broad band service as well as fixed wireless phone (FWP) connection) free of cost to its employees as well as their family members and employers of Bharti Group Companies during the period October, 2004 to September, 2009 under "Bharti Airtel Limited Employees Phone Policy" (Thereinafter referred to as the "policy"). Limit for such free service was prescribed by the policy and beyond that limit, those were charged at a prescribed rate under that policy. The Appellant was neither registered during that period under the Finance Act, 1994 (hereinafter referred to as "The Act") nor the value of free telecom service provided was disclosed to the Service Tax Authority while that value formed part of "assessable value" of the above said taxable service. No service tax returns relating to the impugned period were filed by the appellant. Such breach of law called for adjudication resulting in levy of service tax demand of Rs. 1,18,70,19,472/ - under Section 73 of the Act, penalty of Rs. 125,00,00,000/ - under Section 78 of the said Act followed by interest under Section 75 as well as penalty under Sections 76 & 77 of the Act. Option was granted to the appellant to discharge the tax demand with interest and 25% of the penalty determined u/s 78 of the Act within the period prescribed by law. Without exercising such option, against above demand, the appellant came in appeal before the Tribunal challenging the adjudication with a stay application for stay of realisation of the same. Object of the policy stated aforesaid reads as under (Ref: page 140 of appeal folder):

(2.) WHILE the appellant claimed that the value of aforesaid free service is nil, Clause 3.3.4 of the Policy prescribed mode of valuation of such service as is exhibited by the Table thereunder. The appellant did not disclose aggregate value of free service provided under Jurisdiction of the learned Adjudicating Authority to its employees and their family members as well as Bharti Group of Companies under law and also failed to produce relevant details and failed to establish that it had maintained proper account to determine value of taxable free service provided by it. That caused loss of Revenue.

(3.) LD . Counsel appearing on behalf of appellant denying its liability, moved the stay application arguing as under, praying for stay of realisation of the demand during pendency of the appeal: