Definition: “Telegraph authority” has the meaning assigned to it in Clause (6) of section 3 of the Indian Telegraph Act 1885 and includes a person who has been granted a licence under the first proviso to sub section (1) of Section 4 of that Act.

(Section 65(74) of Finance Act, 1994 as amended)

 

As per Section 3(6) of Indian Telegraph Act, 1885, “ Telegraph Authority” means the director General of Posts and Telegraphs and including any officer empowered by him to perform all or any of the functions of the Telegraph authority under this Act.

 

Section 4 (1) of Indian Telegraph Act, 1885 reads as under:

 

“Within India the Central Government shall have the exclusive privilege of establishing, maintaining and working Telegraphs:

 

Provided that the Central Government may grant a licence on such conditions and in consideration of such payment as it thinks fit to any person to establish, maintain or work a telegraph within any part of India:

 

Provided further that Central Government may, by rules made under this Act and published in Official Gazette, permit, subject to such restrictions and condition as it thinks fit the establishment, maintenance and working

(a) of wireless telegraphs on ships within Indian territorial water and on aircraft within or above India, or Indian territorial water, and

(b) of telegraphs other than wireless telegraphs within any part of India.”

Taxable events and scope of service:

Taxable service means any service provided to the subscriber by the telegraph authority in relation to a telephone connection. (Section 65 (72) (b) of Finance Act 1994 as amended)

“Subscriber” means a person to whom any service of a telephone connection or a facsimile or a leased circuit or a pager or a telegraph or a telex has been provided by the telegraph authority;

(Section 65 (71) of Finance Act 1994 as amended)

 

In the case of plastic roaming facility, the home operator (home network), i.e., where the subscriber belongs to and who arranges roaming facility in other metro cities through the arrangements with the service operators (visiting network) should collect and pay the service tax.

(Ministry’s F.No.149/1/97-CX4, dt.03.09.1997)

 

In the case of International roaming the foreign visited network operator forwards the usage bills to the Home network operator pertaining to the subscribers of Home Network operator who have made usage of visited network. On receipt of the usage bill from the foreign network operator the Home network operator includes the said amount and roaming surcharge in the regular monthly bill of the subscriber. As the value of taxable service under section 67 (b) of the Finance act, 1994 as amended is the gross total amount charged by the telegraph authority (here Home Network operator) from the subscribers, the Board is of the view that the service tax shall be chargeable on the comprehensive (gross) bill raised by Home Network operator on its subscribers inclusive of foreign usage bill and roaming surcharge.

(Ministry’s F.No.149/6/97-CX-4 dt.04.06.1999)

 

For the difference between the amount of service tax to be collected (based on billed amount) and service tax actually collected, the department may not insist at this stage for reconciliation of the figures of such service tax billed and collected and may place reliance on the financial control system of Telecom Department for the reconciliation of the telephone bills which would automatically mean reconciliation of service tax.

(Ministry’s F.No.149/5/95-CX-4 dated 15.10.1996)

 

The first date on which the Secondary Switching Areas make the book transfer to the DOT would be taken as the date of crediting to the Central Govt. for the purpose of assessment and calculation of interest.

(Ministry’s F.No.149/5/95-CX-4 dated 15.10.1996)

Value of the Taxable Service:

The value of taxable service shall be the gross amount charged by the telegraph authority and includes the adjustments made by the telegraph authority from any deposits made by the subscriber at time of application for telephone connection but excludes initial deposit made by the subscriber at the time of application for telephone connection.

(Section 67 of Finance Act, 1994 as amended)

The amount received by the cellular telephone Company from subscribers towards SIM Card would form part of the taxable value for levy of Service Tax. As the SIM Card, unlike the telephone instrument cannot be purchased by the customer from elsewhere, the charges towards the Sim Card can essentially be viewed as processing charges for activating the cellular phone. The taxable amount should, therefore necessarily include the value of the Sim Card.

In cases where the telegraph authority has extended services at a discounted price, the Service Tax liability is limited to the discounted price so charged.

(Ministry’s Circular No.23/3/97-ST dated 13.10.1997)

Exemption and Exclusion:

1. The telephone services provided to the following are exempted from payment of Service Tax

-U.N. or an International Organization. -Specified diplomatic mission or its Members.

-Departmentally run public telephones for local calls.
-Guaranteed public telephone only for local calls.
-Free telephone at Airports and Hospitals where no bills are being issued. –

(Authority:- Notfn.3/94-ST dt. 30.06.1994, 5/96-ST dt. 03.04.1996 and 48/98-ST dt.24.04.1998)