SERVICE TAX TRADE NOTICE  NO.25/2002               DATED: 09/09/02

 

SUB: Services provided by BSNL to basic/Cellular Telephone Service providers - reg.

                 Board's Service Tax Circular No.46/09/2002 dated 8^th August,2002 is communicated for information, guidance and necessary action.

 (Issued from file C.NO.IV/16/2/2002-S.TAX- Part II)

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(V.V.HARIHARAN)

ADDITIONAL COMMISSIONER

     ATTESTED

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SUPERINTENDENT                                                      CHENNAI III

SERVICE TAX CELL

CHENNAI III

 To

As per Mailing list (Both Dept. & Trade)

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         I  am directed to say that doubts have been raised regarding the recovery of service tax  on certain services provided by Bharat Sanchar Nigam Limited (BSNL) to basic telephone service providers (BTSP) and cellular mobile service providers (CMSP).  References have been received from cellular operators association of India, New Delhi and Department of Telecom (DOT).  The services relating to which doubts have been raised are the following.

  (i)              "Inter-connection Link Charges" - These are charges relating to interconnectiviy provided between the basic / cellular telephone providers and the BSNL/MTNL exchanges.  This enables the private basic telephone operators or the mobile service providers to access BSNL telepone lines and vice versa.  This interconnection can be through a cable owned by the BSNL; in which case a monthly/annual rent is charged.  If the cable has been laid/provided by the private basic / cellular telephone service provider, no rental is charged by BSNL.

(ii)            "Rentals for junction links" - These relate to charges for using junction links of the BSNL/MTNL from one exchange to another.

          (iii)         "Port Charges" - These are something like entry  charges for allowing access into the BSNL network.

  (iv)          "Infrastructure Charges" - Sometimes the basic as well as the cellular telephone service prividers needs space to keep their own equipments to facilitate the interconnectivity.  This space, when provided by the DOT, a rental is recovered from them by the DOT.

 2.     This issue had been examined earlier in the Board on a reference received from the BSNL and a clarification was issued vide letter F.No.149/1/2000 CX 4 dated 14.03.2001 (addressed to BSNL with copies to all Chief Commissioners) that so far as BTSPs are concerned, no service tax was leviable in respect of services listed in (i), (ii) and (iv) above.  The clarification did not mention anything aboUt "port charges".

 3.     It has been reported by the DOT that since Board's clarification dated 14.03.2001 referred to BTSPs only, service tax continued to be collected by them on the same services if provided to the CMSPs.

 4.     The matter has been examined in the Board. So far as the above four services are concerned no difference can be drawn between BTSPs and CMSPs.

 5.     It is clarified that in respect of services listed at (ii), (iii) and (iv) above, no service tax is presently leviable.

 6.     So far as "Inter-connectivity Link Charges" are concerned, these are nothing but charges for providing "leased circuits".  This service (leased circuits) has been brought under the coverage of service tax with effect from 16.07.2001.  While issuing Board's clarification dated 14.03.2001, it was inter-alia intimated that this service was not taxable.  However, since "leased circuits" have become taxable w.e.f. 16.07.2001, Board's clarification dated 14.03.2001 stands modified accordingly.

 7.     In short, no service tax is leviable in respect of services listed at (ii), (iii) and (iv) above, both for BTSPs and CMSPs.  However, service tax is leviable, with effect from 16.07.2001, on "inter-connectivity link charges" recovered by BSNL from BTSPs as well as CMSPs.

 Sd/-

SURAKSHA KATIYAR

Under Secy (CX4)