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K.R. Srivats

"The fact that the payment was not directly received from the subscriber does not alter the essential characteristics of the service, which is of a telephone connection.''

New Delhi , Jan. 6

The Finance Ministry has now made it clear that domestic telecom operators would have to fork out service tax on the roaming services provided to people coming into India from abroad — international inbound roamer.

This is in contrast to the views of the operators that service tax levy should not be applicable as an in-bound roamer was not a subscriber (no telephone connection was provided to him) and that such roamer does not undergo registration as a subscriber by entering into a contract with the visiting network or furnishing any identity.

The Finance Ministry has decided to collect service tax in respect of those services that are provided to international in-roamers from January 15 onwards. For the period before this date, the matter is under consideration of the Central Board of Excise and Customs (CBEC).

In international roaming, a subscriber moves to a foreign-service provider's network and uses that network for making and/or receiving a telephone call.

The Finance Ministry has highlighted that, in international roaming, the visiting network provides service to a person treating him as a subscriber on a temporary basis for the period during which service is availed from the visited network. The fact that the payment was not directly received from the subscriber, but routed through the home network, does not alter the essential characteristics of the service, which is of a telephone connection, the Finance Ministry has said.

As for the argument that no telephone connection was provided to an in-bound roamer, the Finance Ministry has noted that a `telephone connection' does not necessarily mean providing a telephone instrument or providing a SIM card.

"Telephone connection is provided so long as the telecom operator provides the facility to make a connection for making or receiving a call (using a telephone) by assigning a unique identification number to line/instrument/ or card used for making a call," the Revenue Department has said.

The Finance Ministry has also said that it would remain a service of telephone connection even if the number were to be allocated temporarily or internally. Moreover, the issues of entering into a contract or verification of the subscriber are not relevant to the levy of service tax.

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