Prathiba M. Singh JUDGMENT
Dr. S. Muralidhar, J.
1. These four writ petitions by Verizon Communication India Pvt. Ltd. ('Verizon India'), under Article 226 of the Constitution raise a common issue viz., whether the services provided by Verizon India under a Master Supply Agreement it has with MCI International Inc. (hereinafter referred to as 'Verizon US'), for rendering connectivity services for the purpose of data transfer, constitutes export of telecommunication services under the Finance Act, 1994 ('FA') read with the relevant rules thereunder?
The background
2. The question arises in the following background. Verizon India is a company incorporated under the provisions of the Companies Act, 1956 and is registered with the Service Tax Department ('Department') under the category of 'Business Support Services'. Verizon India entered into a Master Supply Agreement with Verizon US for rendering connectivity services for the purpose of data transfer. Verizon US is a company located outside India, inter alia engaged in the provision of telecommunication services for which it enters into contracts with its customers located globally.
3. Since Verizon US does not have the capacity to provide such services in all geographical areas across the globe, it utilises the services of other Verizon entities including Verizon India to provide connectivity to its customers. It is stated that such connectivity is provided in the form of:
(a) Local Access: where Verizon India facilitates provision of wire line telecommunication circuit between two Verizon Business designated locations.
(b) Bandwidth: where Verizon India provides diverse wire line telecommunication circuit of a specified bandwidth at the designated locations.
(c) MPLS VPN: wherein a virtual private network is established through a private line.
4. Verizon India states that in order to provide the above services, it has obtained the National Long Distance ('NLD') and International Long Distance ('ILD') licences from the Government of India. Verizon India does not provide voice/telephony services but only data transfer service. It is stated that in order to provide wireless voice telephony services, separate licence and spectrum is required. It is stated that Verizon India did not have to obtain such licence or spectrum as those services are not provided by it.
5. Verizon India further clarifies that it is not privy to the contracts entered into by Verizon US with its customers in the US. Verizon India maintains that even if the services rendered by it are considered to be telecommunication services, the criteria for determining if there is an export of services under the Export of Service Rules 2005 (ESR) is the same. Verizon India contends that it satisfied the twin requirement under the ESR for the service rendered by it to Verizon US to be considered to be an export of service viz., the recipient of the service is located outside India and the payment for the service rendered is received by Verizon India in convertible foreign exchange.
Rejection of the Petitioner's refund applications
6. Verizon India filed fifteen applications before the Assistant Commissioner, Service Tax under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 5/2006-CE (NT) : MANU/EXNT/0079/2005 dated 14th March 2006 and Notification No. 27/2012-CE (NT) : MANU/EXNT/0047/2012 dated 18th June 2012 claiming refund of unutilized Cenvat credit lying in its account on the ground ........