2007 (7) TMI 17 - AT - Service Tax

Photography service Revenue contended that the appellant activity of issue of Electors Photo identity is covered under Photography service Held that revenue contention is not correct

Summary

Issues:
1. Whether the activity of issuing Electors Photo Identity Cards (EPICs) falls under the category of photography service for the purpose of Service tax.
2. Whether the activity of issuing Photo Identity Cards by the Election Commissioner is a sovereign duty exempt from Service tax.

Analysis:

Issue 1:
The appeals before the Appellate Tribunal CESTAT, Bangalore raised the question of whether issuing Electors Photo Identity Cards (EPICs) constitutes a photography service subject to Service tax. The Commissioner (Appeals) had held that EPICs do not fall under the definition of photography service as per Sections 65(78) and 65(79) of the Finance Act, 1994. The Commissioner emphasized that the final activity of photography service involves handing over photos to customers, which is not the case with capturing electors/voters' photos. The Tribunal agreed with the Commissioner's interpretation, citing a case law precedent and ruling that only part of the work can be taxed under photography services. Consequently, the Tribunal allowed the appeals, stating that the services provided were not subject to Service tax, and issuing a Show Cause Notice was not justified.

Issue 2:
Regarding M/s. Bajarang Infotech Systems Pvt. Ltd., the Commissioner upheld the Revenue's contention that the activity of issuing Photo Identity Cards should be classified under photographic service, leading to demands being confirmed. In response, the appellants argued that the Photo Identity Cards should be treated as goods under a specific classification, exempting them from Service tax. They further contended that the activity of issuing these cards by the Election Commissioner is a sovereign duty and cannot be taxed. The Tribunal examined relevant circulars and rulings, noting that activities performed by State functionaries, such as issuing EPICs, are sovereign functions and not photographic services. The Tribunal referenced circulars supporting this view and a previous case precedent where activities performed by a State organ for sovereign purposes were deemed non-taxable. Ultimately, the Tribunal rejected the Revenue's appeals, allowing M/s. Bajarang Infotech Systems Pvt. Ltd.'s appeal and granting any consequential relief.

In conclusion, the Tribunal dismissed the Revenue appeals, emphasizing that the issuance of Electors Photo Identity Cards and similar activities by State entities are sovereign functions exempt from Service tax, not falling under the category of photography services.