Telecom major Bharti Airtel has been asked to pay Rs 80 crore as service tax under a Customs, Excise and Service Tax Appellate Tribunal (CESTAT) order issued on Thursday.

According to the order, the telecom company has to pay the amount for period up to 2009 with regard to the free telephone connection provided to its employees.

The total services tax liability for providing free telephone connection, a government source said, was over Rs 120 crore. However, Bharti Airtel had appealed against the order in the CESTAT. As per the order the company will have to pay up the service tax "within four weeks", the source said.

Free telephone connection provided to employees is exempted from the service tax net only when the service is provided absolutely free without even any hidden charges.

According to experts, many companies provide free services but charge it indirectly from the beneficiary.

So, the value of taxable services in relation to telephone connection provided is the total amount received by the telegraph authority from the subscriber. In case the service is provided free and no amount is received by the telegraph authority, the service tax at the current rate of 12.36 per cent is not to be paid.