VODAFONE ESSAR DIGILINK LTD. Vs. CCE

JUDGEMENT

(1.) DISPUTE in this appeal relates to utilization of service tax credit as per Rule 3(3) in excess of 35% of the amount of service tax payable on the output service as provided in Rule 3(5) of the erstwhile Service Tax Credit Rules 2002. The case of the appellant is that the restriction of 35% provided in Rule 3(3) is applicable to when output service is exempted from service tax; as 'telephone service' is not exempted from service tax, restriction of 35% under Rule 3(5) is not applicable. It was stated that the Central Government vide -ST dated 15.6.2007 waived the payment of service tax on international inbound roaming service for the period 1.7.1994 to 14.1.2007 in terms of Section 11C of the Central Excise Act read with Section 83 of the Finance Act but waiver of tax does not amount to exemption from tax within the meaning of Rule 3(3) of the Service Tax Credit Rules. In any view, according to the appellant, if the entire period under dispute (May 2003 to August 2004) is taken into account, there was no utilization of service tax credit in excess of 35%. It is also the case of the appellant that there being no suppression of facts, mis -statement etc., the extended period of limitation could not be applied and, therefore, the show cause notice issued on 21.8.2006 for the period from May 2003 to August 2004 should have been dropped.

(2.) ON behalf of the Revenue, it was submitted by the learned DR that the service provided by the appellant was interconnected usage service which is part of the telecom service, and as the same was not exempted and therefore, the provisions of Rule 3(5) of the Service Credit Rules read with the provisions of Rule 3(3) would be applicable. It was also submitted that as the service tax payable is on monthly basis though the return may be filed on six monthly basis, the appellant cannot contend that the utilization of service credit should be worked out over a period of time and not on monthly basis.

(3.) THE learned DR reiterated that in the absence of any provision to the contrary in the Rules, the liability has to be worked out on monthly basis and not over a period of time.