SC to examine appeal seeking to levy service tax on the call option fee received by Vodafone India non-executive
Supreme Court on Friday agreed to examine the Commissioner of Service Tax’s appeal seeking to levy service tax of Rs 19.79 crore on the call option fee received by Vodafone India non-executive Chairman Analjit Singh from the British firm in 2007.
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A Bench led by Justice Ajay S Oka admitted the department’s appeal against the order of CESTAT, Delhi, that held that granting “call option” is not an activity of rendering service and, therefore, Singh was wrongly been held to have been a service provider while receiving “call option fee” from Vodafone. The tribunal had also in July held that the demand of service tax was wrongly confirmed, the Finance Act was also wrongly invoked and the penalty was also wrongly imposed.
The department had conducted audit of Singh, who is registered with Service Tax Commissionerate for rendering Management Consultant Services, for 2007 to 2011. It found that Singh had income in the form of “call option fee,” but had not paid service tax as he treated the income as non-taxable. The department then formed an opinion that the amount was received by Singh for rendering taxable service (support service of business or commerce) under the Finance Act, 1994. Thus, Rule 5 of Service Tax (Determination of Value) Rules, 2006 was invoked alleging that the amount received in the name of “Call Option Fee” had to be an amount includable in the taxable value. Accordingly, service tax amounting to Rs 12.94 crore including education and higher education cess, interest and penalty was demanded
