2007 (9) TMI 26 - HC - Service Tax

Business Auxiliary service - Revenue contented that the respondent activity of collection of blood, urine and stool samples on behalf of its principal is covered under Business auxiliary service and accordingly demand were made along with penalty - Held that revenue contention was not valid and set aside

Summary

Issues:
1. Whether the services rendered by the assessee-respondent fall under the category specified in the definition of 'Business Auxiliary Service'?
2. Whether service tax is payable on the services provided by the assessee-respondent?

Analysis:
1. The appeal filed by the revenue challenged the order passed by the Tribunal, which held that the services provided by the assessee-respondent did not fall under the definition of 'Business Auxiliary Service.' The revenue contended that the activities amounted to promotion or marketing of services provided by the principal lab, which was rejected by the Tribunal. The Tribunal concluded that the services provided by the collection centers were integral to testing and analysis services, falling within the scope of 'Technical Testing and Analysis Services.' The Tribunal emphasized that the drawing of samples was connected to testing and analysis, making it clear that the services rendered by the collection centers were within the scope of technical testing and analysis services.

2. The dispute revolved around the interpretation of the statutory provisions defining technical testing and analysis services and business auxiliary services. The Tribunal highlighted that once there is a specific entry for an item in the tax code, it cannot be taxed under any other entry. The Tribunal emphasized that the legislature had excluded testing or analysis in relation to human beings or animals from the levy, indicating the intention not to impose any tax on such excluded services. The Tribunal found that the services provided by the appellants did not fall under any category specified in the definition of business auxiliary service, as they were not engaged in promotion or marketing activities. The Tribunal concluded that the activities of the assessee-respondent did not qualify as business auxiliary services as per the statutory provisions.

3. The High Court, after considering the arguments presented by the revenue, upheld the Tribunal's decision. The Court noted that the activity of the assessee-respondent was limited to operating a collection center for drawing blood samples and essential processing, forwarding the samples to the principal lab, and waste disposal. The Court referred to the statutory provision defining technical testing and analysis services, which excluded services related to human beings or animals. The Court emphasized that merely providing incidental services like mentioning the principal company's name did not bring the activity under the definition of business auxiliary services. Therefore, the Court dismissed the appeal, affirming the Tribunal's decision regarding the taxability of the services provided by the assessee-respondent.