2016 (12) TMI 164 - AT - Service Tax

Demand - printing services provided to bank - whether the printing service provided by the appellant to M/s. HDFC Bank Ltd during the period July, 2003 to March, 2004 falls under the category of Business Auxiliary Services Clause (iv) and liable for service tax? - Held that - On careful reading of judgment in case of the Phoenix IT Solutions Ltd. 2014 (9) TMI 672 - Andhra Pradesh High Court it is observed that in the said judgment more or less similar services such as spot billing, maintaining account etc were held to be classifiable as Business Support Service falling under Section 65(104c) of Finance Act, 1994 and not under Business Auxiliary Services. The Business Support Service became taxable w.e.f. 1-5-2006 therefore the appellant s services being similar, more appropriately classifiable as Business Support Service and the same was not taxable during the period involved in the present case - demand of service tax on the printing service provided by the appellant is not taxable. Therefore demand of service tax and consequential penalty and interest are set aside. Whether input service credit in respect of service tax paid on the premium of insurance policies of employees is admissible in terms of Service Tax Credit Rules, 2002? - Held that - It is observed that all the three insurance policies are for the employees of the appellant s company. The issue whether this service are in or in relation to providing output service, has been considered in the judgments of the case of Commissioner of Central Excise, Bangalore-III, Commissionerate Versus Stanzen Toyotetsu India (P.) Ltd. 2011 (4) TMI 201 - KARNATAKA HIGH COURT , and it was held that the insurance of the employees is the service which is used in providing output service - the service tax credit in respect of insurance policy is admissible, hence following the ratio of the above judgment, we allow the service tax credit in respect of insurance policy. Appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
1. Whether the printing services provided by the appellant to M/s. HDFC Bank Ltd. fall under Business Auxiliary Services Clause (iv) and are liable for service tax.
2. Whether input service credit for service tax paid on the premium of insurance policies of employees is admissible under the Service Tax Credit Rules, 2002.

Analysis:

Issue 1:
The appellant provided printing services to the bank, and the dispute arose regarding the classification of these services under Business Auxiliary Services. The Revenue contended that the printing services were covered under clause (iv) of Section 65(19) of the Act, which includes incidental or auxiliary support services. However, the appellant argued that printing services cannot be considered incidental or auxiliary to the services specified in clauses (i) to (iii) of the same section. The Tribunal analyzed the services provided by the appellant and concluded that printing services did not fall under Business Auxiliary Services. Referring to a judgment by the Andhra Pradesh High Court, similar services were classified as Business Support Services, which were not taxable during the relevant period. Therefore, the demand for service tax on printing services was set aside, along with penalties and interest.

Issue 2:
Regarding the admissibility of input service credit for the premium of insurance policies, the appellant argued that these policies were essential for the functioning of their business and should be considered input services under the Service Tax Credit Rules, 2002. The Tribunal considered various judgments, including those from different Tribunals and High Courts, which supported the view that insurance policies for employees are used in providing output services. Citing these precedents, the Tribunal allowed the service tax credit for insurance policies and modified the impugned order accordingly. The appeal was allowed with consequential relief, if any, as per the law.

In conclusion, the Tribunal ruled in favor of the appellant on both issues, determining that the printing services were not taxable under Business Auxiliary Services and that the service tax credit for insurance policies was admissible. The decision was pronounced on 17/10/2016.