2008 (10) TMI 111 - AT - Service Tax

Appellants collecting telephone bills on behalf of BSNL and premium charges on behalf of ICICI Prudential Life Insurance - collecting of telephone bills from the customers of BSNL does not come within the ambit of Business Auxiliary Services , hence, demands is set aside in respect of tax on the premium collected, the appellants have produced evidence to show that ICICI Prudential Life Insurance has already paid Service Tax, hence, the confirmation of demands on appellant is not justified

Summary

Issues Involved:
1. Classification of services rendered by the appellant as "Business Auxiliary Services" or "Banking and Other Financial Services."
2. Liability of the appellant to pay Service Tax for collecting telephone bills on behalf of BSNL.
3. Liability of the appellant to pay Service Tax for collecting premium charges on behalf of ICICI Prudential Life Insurance.

Detailed Analysis:

1. Classification of Services:
The primary issue was whether the appellant's activities fell under "Business Auxiliary Services" or "Banking and Other Financial Services." The department argued that the appellant's activity of collecting telephone bills for BSNL should be categorized under "Business Auxiliary Services" as it constituted a "customer care service" on behalf of BSNL. The appellant contended that their activities were part of "Cash Management Service," which is exempted under "Banking and Other Financial Services." The tribunal analyzed the definitions of both service categories and concluded that the appellant's activities were more aligned with "Cash Management Service," which is excluded from the purview of "Business Auxiliary Services."

2. Service Tax on Collection of Telephone Bills:
The tribunal reviewed the appellant's activity of collecting telephone bills from BSNL customers. The department's stance was that this activity should be taxed under "Business Auxiliary Services." However, the tribunal found that the appellant was merely facilitating the deposit of bills into BSNL's account and not engaging in any promotional or marketing activities for BSNL. The tribunal emphasized that the basic activity of promoting or marketing the sale of goods or services was absent in this case. Therefore, the collection of telephone bills was deemed to fall under "Cash Management Service," which is excluded from "Business Auxiliary Services." Consequently, the demand for Service Tax on this activity was set aside.

3. Service Tax on Collection of Premium Charges:
Regarding the collection of premium charges on behalf of ICICI Prudential Life Insurance, the appellant argued that ICICI Prudential had already paid the Service Tax on these transactions. The tribunal reviewed the evidence provided by the appellant, which confirmed that ICICI Prudential had indeed paid the Service Tax. Based on this evidence, the tribunal concluded that there was no justification for demanding Service Tax from the appellant for this activity. Thus, the confirmation of demands on the appellant for this issue was also set aside.

Conclusion:
The tribunal allowed the appeals, setting aside the demands raised by the department. It was held that the appellant's activities of collecting telephone bills and premium charges did not fall under "Business Auxiliary Services" but were part of "Cash Management Service," which is exempted under "Banking and Other Financial Services." The decision was based on the tribunal's interpretation of the relevant legal definitions and the evidence provided by the appellant. The appeals were allowed, and the demands for Service Tax were annulled.