Taxability of import of International Private Leased Circuit services

The International Private Leased Circuit services (IPLC services) provided by the ‘Telegraph Authority’ is taxable under the category of ‘Telecommunication Services’.  In this regard, the CBEC had issued a Circular on 15 July 2011 clarifying that, in case the IPLC services are provided by a person located outside India and received by a person in India, service tax cannot be levied under the category of ‘Telecommunication Services’ as the provider of services is not a ‘Telegraph Authority’ within the meaning of Indian Telegraph Act, 1885.  Such services are therefore required to be classified under the category of ‘Business Support Services’ and are subject to levy of service tax in the hands of the recipient of services.

In this background, the CBEC has recently issued a Circular, re-examining the clarifications provided in the earlier Circular dated 15 July 2011.  As per the recent clarifications, the IPLC services rendered by a person located outside to a person located in India, is neither taxable under the category of “Telecommunication Services”, nor taxable under the category of “Business Support Services”.