Page 190 - ELT_3rd_1st May 2020_Vol 372_Part

412 EXCISE LAW TIMES [ Vol. 372

ants & Technocrats Pvt. Ltd. v. UOI, 2013 (29) S.T.R. 9 (Del.) as affirmed by the Su-
preme Court in 2018 (10) G.S.T.L. 401 (S.C.); the impugned order is wholly de-
void of legality. Learned Senior Counsel submits that at best the activity of sup-
ply of VSAT could come under the activity of “supply of tangible goods” vide Sec-
tion 65(105)(zzzzj) of the Act w.e.f. 16-5-2008; hence, for the period in question,
VSAT management fee charged towards supply of goods cannot be subjected to
Service Tax during the period in question. He places Reliance on the decision in
Indian National Ship-owners Association v. UOI, 2009 (14) S.T.R. 289 (Bom.) and
Jindal Drilling & Industries Ltd. v. CST, 2016 (41) S.T.R. 203 (Tri-Mum.). As re-
gards, VSAT usage fee they were wholly in the nature of telecommunication
costs apportioned and recovered as reimbursement; this amount has already suf-
fered tax inasmuch as Airtel who is the supplier of the said service has already
charged Service Tax on the same under the taxable category of ‘telecommunica-
tion service’.
9. Learned AR appearing for the Revenue reiterates the findings of
OIO.
10. Heard both sides and perused the records of the case. Brief issues
that require consideration in this case or as to Whether VSAT (Very Small Aper-
ture Terminal) fee (both one-time fee for supply of goods and actual usage
charges) charged for supply of VSAT equipment is liable for Service Tax under
“franchise service” under Sections 65(105)(zze) read with Sections 65(47) & (48)
of the Finance Act, 1994 and as to Whether demands are wholly barred by limita-
tion.
11. At the outset, we find that Learned Senior Counsel has made out a
strong case on the issue of limitation. It is evident on records that the appellants
are registered with the department and are in continuous correspondence with
the department and various visits of Audit teams have taken place. Moreover,
the department has issued a Show Cause Notice dated 11-3-2008, demanding
Service Tax in respect of (i) Affiliation Fee; (ii) Inspection Fee; (iii) Licence Fee,
under the category of “franchise service”. The SCN is based on the same set of
contracts and other documents. Therefore, we hold that the department is not
within their right to issue a second show cause notice alleging suppression. Go-
ing by the ratio of Apex Court’s judgment on the case of Nizam Sugar Factory (su-
pra) we find that the SCN and the OIO are liable to be set aside.
12. We will endeavor to touch upon the issue on merits though we
have held that the issue is barred by limitation. Ongoing through the Learning
Centre Agreement, we find that Clause 4.5 reads as under.
“4.5. In order to enable the Participant to duly fulfil its obligations here-
under, MUL shall provide a VSAT to the Participant for exclusive use at the
Learning Centre, upon payment of a non-refundable fee as set out in An-
nexure B. The Participant shall comply with the requirements of MUL in-
cluding the provisions of the Operations Manual with respect to the opera-
tion, maintenance and safeguard of the VSAT. For the sake of clarity it is
hereby confirmed that the ownership of such VSAT shall always vest with
MUL”.
11.1 (h) The participants shall not describe itself or act as an agent or rep-
resentative of MUL.
15.1 It is understood that the arrangement between the parties contem-
plated by this agreement shall be on a principal-to-principal basis. None of
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