I want to know how to send and receive SMS
via PC modem over PSTN
? Is there any application to do this for me or what's the protocol of this process?
You need an operator who supports fixed line SMS and you need a modem that can send the SMS such as:
http://www.ntstelecom.co.uk/SMSmodem.htm
An application which can send SMS's using a GSM modem and AT commands will probably be able to use the above, in place of the GSM modem, to send the SMS over the PSTN.