2015 (1) TMI 1047 - HC - Service Tax

Chartered Accountant service - Whether the billing activity calculation undertaken at the behest of Chartered Accountant amounts to practicing of registered Chartered Accountancy in order to levy Service Tax - Held that - Tribunal has relied on its own decision in the case cited 2007 (10) TMI 144 - CESTAT, BANGALORE . In that case, it was held that the billing activity, which is undertaken at the instance and on behalf of a Chartered Accountant, is not the job of Chartered Accountant professionals. We find sound logic of this conclusion as the Chartered Accountant starts his functioning the moment accounts are complete. If the accounts are not complete, the Chartered Accountants ordinarily advise their clients to prepare proper accounts, and in support of these accounts vouchers and bills are required to be prepared. Chartered Accountants themselves do not prepare bills or vouchers. This is done by ministerial staff and clerks and that is not part of the job of the Chartered Accountant. As such, we accept the findings of the Tribunal. We, therefore, do not find any merit in this appeal. - Decided against Revenue.

Summary

Issues:
Whether billing activity undertaken at the behest of a Chartered Accountant amounts to practicing registered Chartered Accountancy for levying Service Tax.

Analysis:
In this case, the Tribunal did not independently decide the matter but followed a previous decision in the case of C.C.E v. Umakanth & Co. The appellant argued that billing activity is integral to the Chartered Accountancy profession, and thus, Service Tax should be applicable to Chartered Accountants. On the other hand, the respondent contended that billing activity is clerical and done by Accountants and Clerks, not Chartered Accountants. They emphasized that the role of Chartered Accountants is to verify proper accounting, which requires a higher level of expertise than billing. The High Court noted that Chartered Accountants typically advise clients to prepare proper accounts, and the preparation of bills and vouchers is not part of their job. The Court agreed with the Tribunal's decision that billing activity is not the responsibility of Chartered Accountants, leading to the dismissal of the appeal.

The judgment underscores the distinction between the responsibilities of Chartered Accountants and clerical staff in billing activities. It clarifies that Chartered Accountants do not engage in preparing bills or vouchers, which is considered a clerical task. The decision is based on the understanding that Chartered Accountants focus on verifying proper accounting practices rather than performing clerical duties like billing. By affirming the Tribunal's ruling, the High Court establishes that Service Tax should not be levied on Chartered Accountants for billing activities conducted by clerical staff under their direction.

Overall, the judgment provides clarity on the scope of responsibilities within the Chartered Accountancy profession concerning billing activities and Service Tax implications. It highlights the specialized role of Chartered Accountants in ensuring proper accounting practices and distinguishes their duties from clerical tasks like billing. The decision reinforces the principle that Service Tax should be applicable based on the nature of services rendered by professionals, emphasizing the expertise and specific functions associated with the Chartered Accountancy profession.