Service Tax – Non-payment of Service Tax by BSNL on the Commission/ discount amount paid to PCO operators
Chief Commissioner, Vizag has informed his Commissioners that:
CESTAT, New Delhi, in the case of BharatiInfotel Ltd. Vs. Commissioner of Central Excise, Bhopal [reported in 2005-TIOL-819-CESTAT-DEL] held that valuation is to be based on the amount received by the telegraphic service provider from the subscriber (PCO Operator) and not on the basis of amount charged by the PCO operator from the customers/ users. In this connection, vide letter F.No. III (20)RC/CESTAT/02/2005 dt.08.02.2011 (copy enclosed for ready reference), Bhopal Commissionerate informed that the Board has decided not to file appeal before the Supreme Court and hence CESTAT judgement in the case of BharatiInfotel attained the finality. Therefore issues pending in this regard may be disposed off (sic) at the earliest.
In the present situation, Public Call Operator (PCO) gets a commission and therefore it appears that PCO is covered under Business Auxiliary Service (BAS), subject to their being above the exemption limit.
Therefore the Chief Commissioner wants all the Commissionerates to undertake an immediate verification on this aspect to ensure that proper action is taken to safeguard the revenue in respect of all such PCOs.
In some Commissionerates, notices are still being issued to BSNL demanding Service Tax on the commission paid to the PCO operators and the notices invariably charge BSNL with suppression and intent to evade payment of tax!