VODAFONE DIGILINK LTD Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) Appeal has been preferred under Section 35G of the Central Excise Act, 1944 as against order dated 28-6-2011 passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi (in short, 'the Tribunal') in Appeal No. ST/246/2008-CU[DB] [, : 2011 (24) S.T.R. 562 (Tri.-Del.)]. Appellant was inter alia engaged in providing cellular telephone service in Jaipur Circle. It was registered and paying service tax under 'telephone services'. Appellant was receiving various input services and availing Service Tax credit on the same in terms of Service Tax Credit Rules, 2002 (hereinafter referred to as 'the Rules of 2002'). The appellant was also receiving roaming ( National & International) charges from other telecom operators. Roaming charges were paid by the home operator (telecom operator with whom the subscriber is registered) to the service operator (telecom operator whose network the subscriber of the home operator is visiting). Thus, the appellant has received roaming charges from various other operators towards roaming facility provided by the former to the subscribers of the latter while on visit to Jaipur Circle. The appellant was not paying service tax on roaming charges received from other operators during the period of dispute i.e. May 2003 to August 2004. The appellant was of the view that Rule 3(5) of the Rules of 2002 was not applicable to it because the appellant was not providing exempted service or non-taxable service. Thus, the appellant was utilizing the Service Tax credit availed on various input services for payment of service tax on output telephone service without any restriction of 35% specified in Rule 3(5) of the Rules of 2002.

(2.) A show cause notice was issued on 21-8-2006 proposing to recover service tax of Rs. 39,41,384/- on the ground that the appellant should have restricted utilization of Cenvat credit towards payment of output service tax in terms of Rule 3(3)/3(5) of the Rules of 2002. Reply to the show cause notice was given on 22-11-2006. Appellant appeared before the Additional Commissioner for personal hearing. The Additional Commissioner passed order on 3-4-2007 confirming the demand of service tax of Rs. 35,99,882/- for the aforesaid period on the ground that the roaming charges were received by the appellant for providing non-taxable service. The Additional Commissioner has also imposed penalties and ordered for recovery of interest. Appeal was preferred as against the order before the Commissioner (Appeals). Commissioner (Appeals) confirmed the order passed by Additional Commissioner. Aggrieved thereby, appeal was filed before the Tribunal. The Tribunal has remanded the case to the original authority for re-quantification of demand after considering the excess/short utilization of credit in each half yearly return period, instead of monthly basis. So far as restriction of Cenvat credit to the extent of 35% was concerned, it was not disputed being covered by virtue of decision of the Tribunal in Idea Cellular Ltd. v. Commissioner of Central Excise, Rohtak,2009 16 STR 712 (Tri.-Del.). Visiting network service is exempted for which admissibility of Cenvat credit shall be limited to 35% in respect of each return period when Cenvat credit is claimed for set off. Accordingly, liability of the appellant was ordered to be recalculated giving set off on Cenvat credit limiting to 35% in respect of each return period. The 'Tribunal accordingly held that the adjudication shall end in re-computing service tax demand. The Tribunal has relied upon the decision in Idea Cellular Ltd. case . However for the issue of extended period along with interest and penalty, the Tribunal has confirmed the invocation of extended period of limitation and upheld the penalty imposed under Section 76 of the Finance Act, 1994 (hereinafter referred to as "the Act of 1994") and so far penalty under Section 78 of the Act of 1994 is concerned, that has been ordered to be limited to the quantum of tax payable upon re-computation as directed by the Tribunal. However, the authority was directed to examine whether concession in penalty is permissible under second proviso to Section 78 of the Act of 1994. Appeal has been allowed to the aforesaid extent.

(3.) Learned counsel appearing on behalf of the appellant has submitted that in the instant case provision of limitation as contained in proviso to sub-section (1) of Section 73 could not have been invoked. It could not be said to be a case of deliberate suppression; mere omission to give correct information is not suppression of fact unless it was deliberate to stop the payment of duty. 'Suppression' means failure to disclose full information with the intent to evade payment of duty. Hence, penalty could not have been imposed. Thus, the impugned order is bad in law. However, learned counsel has submitted that the issue of taxability in the instant case stands settled by the decision of the Tribunal in the case of Idea Cellular Ltd. , that part of the order has not been questioned; penalty part has been questioned.