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Circular No. 146/15/2011 - Service Tax
F. No. 137/115/2011 - Service Tax
Government of India
Ministry of Finance
Department of Revenue
(Central Board of Excise & Customs)
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New Delhi, the 20
th
September 2011
To
Chief Commissioners of Central Excise & Customs (All)
Chief Commissioners of Central Excise (All)
Director General of Central Excise Intelligence
Director General of Audit & DGST
Commissioners of Service Tax (All)
Madam/Sir
Subject: Service Tax - Audit of the accounts of M/s Bharat Sanchar Nigam Ltd, Tiruchirapalli - Issue of eligibility or
otherwise of Notification No.03/1994 - ST dated 30.6.1994 in case of telephone services for local calls provided
through Village Panchayat Telephones - regarding.
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Reference has been received from the Chief Commissioner, Central Excise, Coimbatore, wherein, a clarification has been
requested for uniformity in assessment as regards levy of service tax on telephone services rendered by M/s BSNL through
Village Panchayat Telephone (VPT) with local call facility, after M/s BSNL have become a public sector unit.
2. The issue in brief is that M/s. BSNL, which was earlier (that is, prior to 1.11.2000) known as Department of
Telecommunications, had been rendering telephone services through Village Panchayat Telephone (VPT) for local call facility.
2.2 Notification No.3/94-ST dated 30.6.1994 exempts specified taxable services and includes interalia - ' Departmentally run
Public Telephones for local calls' (Sl.No.12 of the table under the Notification). Thus, upto 31.10.2000, the Department of
Telecommunications was correctly availing exemption under the above provisions for rendering the said services. However,
after 1.11.2000, Department of Telecommunications was corporatized into M/s BSNL, a public sector undertaking. Therefore,
a doubt has arisen as to whether M/s BSNL would be eligible for the said exemption under Sl.No.12 of the table
appended to notification No.3/94, since it is not a government department anymore. There have been conflicting views
on the subject and a clarification has therefore been requested.
3. The matter has been examined. As per Sl.No.13 of the table appended to the Notification No.3/94(S.T.) dated 30.6.94, there
is exemption for ' Guaranteed Public Telephone operating only for local calls ' and therefore, M/s. BSNL is eligible for
exemption under this provision. In this context, the PSU Division of Department of Communications, Ministry of
Communications and IT, has also clarified that Village Public Telephones (VPTs) with facility of local calls (without 95 dialing
facility or STD facility) would fall under the category of 'Guaranteed Public Telephone operating only for local calls' .
4. Thus, even after 1.11.2000, M/s. BSNL continue to be covered under the ambit of the said notification (by virtue of
Sl.No.13 of the table appended to the notification) and, therefore, are clearly eligible for exemption.
5. It is requested that all pending matters on this issue may please be decided accordingly.
Yours faithfully
( Deepankar Aron )
Director (Service Tax)
CBEC, New Delhi

Ph. 011 2309 3355