Service Tax - Telephone Services Provided through Village Panchayat Telephones - CBEC Clarifies
BSNL, which was earlier (that is, prior to 1.11.2000) known as Department of Telecommunications, had been rendering telephone services through Village Panchayat Telephone (VPT) for local call facility.
Notification No.3/94-ST dated 30.6.1994 exempts specified taxable services and includes ‘Departmentally run Public Telephones for local calls' (Sl.No.12 of the table under the Notification). Thus, up to 31.10.2000, the Department of Telecommunications was correctly availing exemption under the above provisions for rendering the said services.
However, after 1.11.2000, Department of Telecommunications was corporatized into BSNL, a public sector undertaking. Therefore, a doubt has arisen as to whether BSNL would be eligible for the said exemption under Sl.No.12 of the table appended to notification No. 3/94, since it is not a government department anymore.
There have been conflicting views on the subject and a clarification has therefore been requested.
Board Explains:
As per Sl.No.13 of the table appended to the Notification No. 3/94(S.T.) dated 30.6.94, there is exemption for ‘ Guaranteed Public Telephone operating only for local calls ' and therefore, BSNL is eligible for exemption under this provision. In this context, the PSU Division of Department of Communications, Ministry of Communications and IT, has also clarified that Village Public Telephones (VPTs) with facility of local calls (without 95 dialing facility or STD facility) would fall under the category of ‘Guaranteed Public Telephone operating only for local calls.
And Clarifies:
Thus, even after 1.11.2000, BSNL continues to be covered under the ambit of the said notification (by virtue of Sl.No. 13 of table appended to the notification) and, therefore, are clearly eligible for exemption.
Circular No. , Dated: September 20, 2011