2008 (7) TMI 298 - AT - Service Tax

Agreement with the Electricity Board and Public Health Department for development of software and for printing the monthly bills - contention of the applicant is that they are only printing the bills after printing the bills were handed over to the concerned department and concerned Govt., department distributes the bill to the customers, therefore, mere printing of bill does not make the applicant liable under business auxiliary service prima facie case against demand stay granted

Summary

Issues:
1. Waiver of pre-deposit of Service Tax and penalties on the grounds of providing business auxiliary service.
2. Classification of services provided as Information Technology Service or business auxiliary service.
3. Dispute regarding liability for service tax on printing bills for Electricity Board and Public Health Department.

Analysis:
The judgment by the Appellate Tribunal CESTAT, New Delhi dealt with the issue of waiver of pre-deposit of Service Tax and penalties concerning the provision of business auxiliary services. The applicant had filed for waiver of an amount of Service Tax and penalties totaling Rs. 14,30,320/-, contending that the demand was confirmed based on providing business auxiliary services. The applicant argued that their activities, including software development and bill printing for the Electricity Board and Public Health Department, should be classified as Information Technology Services and not business auxiliary services. They highlighted a similar case where the Commissioner (Appeals) had set aside the demand for another assessee engaged in the same activities, supporting their claim.

The Revenue, on the other hand, argued that the software development occurred prior to the relevant period, and any charges for new customers added during that period were applicable. They also mentioned an ongoing appeal against a previous order by the Commissioner (Appeals). The Revenue contended that the applicant's bill printing activities for the Electricity Board and Public Health Department constituted business auxiliary services due to their involvement in preparing bills on behalf of these entities.

In response, the applicant clarified that they merely printed the bills, which were then handed over to the respective government departments for distribution to customers. They argued that this activity did not fall under the category of business auxiliary services. The Tribunal observed that a previous order by the Commissioner (Appeals) favored a competitor of the applicant, setting aside a similar demand. Considering that the applicant was only involved in bill printing, with distribution handled by the government departments, the Tribunal found a strong case in favor of the applicant. Consequently, the Tribunal waived the pre-deposit of duty and penalties, allowing the stay petition and directing the listing of the appeal with the related case already fixed for a future date.