The Chandigarh Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that no service tax is payable on the free allowance given to the employees by the appellant, Bharti Airtel which is in the nature of discount/concession.
The bench of S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that the Show Cause Notice is vague and does not specify the service which is rendered by the appellant; moreover, the benefit of discounts/ free allowance is accruing to the employees rather than the appellant who is the service provider.
The appellants/assessee are engaged in providing various taxable services and registered under“Telecommunication Service, Business Support Services, Sponsorship Service” etc.
The appellant offers “Airtel Employees Services Scheme” to its employees (Scheme), under which, employees are granted waiver from payment of telephone charges up to the Call Free Allowance (CFA) limit for mobile phones and fixed line connections; the waiver is allowable only to the employees of the Appellant and not their relatives and employees of other group companies.
CFA limit is on a monthly entitlement basis and any unused portion is not carried forward to the next month; in case an employee exceeds the CFA limit granted to him, the excess amount is collected by the Appellant along with appropriate amount of service tax payable, which is deposited by the Appellant.
However, if the employee proves that the excess usage was directly related to work then exemption can be granted subject to approval from Function Heads or CEO/COO as specified under the Scheme; in case of the approval of the said waiver, waived amount is reimbursed as per a laid down process.
The department conducted an Audit of the appellants circle in Karnataka; appellant was asked to submit details of the waiver granted by the Appellant to its employees; show cause notices were issued to the Appellant for the Bangalore Circle proposing the demand of service tax under “telephone services‟ on the amount of call free allowance waiver granted by the Appellant to its employees.
The tribunal allowed the appeal of Bharti Airtel and quashed the order.
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Case Details
Case Title: Bharti Airtel Ltd Versus Commissioner of Central Goods & Service Tax, Gurugram
Case No.: Service Tax Appeal No. 1768 of 2012
Date: 27.01.2025
Counsel For Appellant: Advocate B.L. Narasimhan, Advocate Ms. Krati Singh, Advocate Ms. Shreya Khunteta
Counsel For Respondent: Shyam Raj Prasad, Special Counsel (AR)
