2017 (3) TMI 1159 - AT - Service Tax

Bill printing service to telecom companies - whether business auxiliary service or not? - Held that - The appellant/assessee in the present case is not involved in any calculation of quantification of the bill amount, details to be presented in the bill and regarding correctness of the said details in the bill. In other words, the appellant/assessee is not responsible for any details in the bill or authenticity of the same. They are simply printings in a preformatted design the telephone bills based on the data provided by the telecom company and give the printed bills in envelops, after bunching in convenient groups, for further follow up by the telecom companies - such activity cannot be considered as business auxiliary service One more point to note is, that sub-clause (vii) talks about incidental or auxiliary service to any one of the activity in sub-clauses (i) to (vi). These sub-clauses talk about promotion or marketing of service provided by the client or customer care service provided on behalf of the client, provision of service on behalf of the client - the appellant/assessee is nowhere connected with promotion of service or provision of service on behalf of the telecom companies. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Service tax liability for bill printing service under Business Auxiliary Service (BAS) - Interpretation of statutory definition of Business Auxiliary Service - Application of sub-clause (vii) - Whether printing of telephone bills qualifies as 'billing' - Whether appellant/assessee's activities fall under BAS.

Analysis:
The judgment pertains to appeals against an order confirming service tax liability for providing bill printing service to telecom companies under Business Auxiliary Service (BAS). The Revenue contended that the activities are taxable under BAS as per Section 65 (19) of the Act. The Original Authority imposed penalties under Section 76 and 77 of the Act. The appellant/assessee challenged the service tax liability, while the Revenue appealed against dropping of demand for an extended period and non-imposition of penalty under Section 78 of the Finance Act, 1994.

The Tribunal analyzed the terms of the contract between the appellant/assessee and a telecom company, which included printing telephone bills and post-printing activities like sorting, bundling, and dispatching bills. The statutory definition of Business Auxiliary Service under Section 65 (19) was examined, particularly sub-clause (vii) which includes activities such as billing. The Original Authority's interpretation of 'billing' as printing and dispatching bills was deemed unsustainable by the Tribunal. It was observed that the appellant/assessee's role was limited to physical printing of bills based on data provided by the telecom company, without involvement in quantification or calculation of bill details.

The Tribunal noted that the appellant/assessee's activities did not align with the essence of business auxiliary service, which involves promotion, marketing, or provision of services on behalf of the client. The judgment highlighted a previous Tribunal order that printing and delivering bills to the client does not constitute business auxiliary service. Ultimately, the Tribunal set aside the impugned order, allowing the appeal filed by the appellant/assessee and dismissing the Revenue's appeal. The Cross Objection by the appellant/assessee was also disposed of, with the judgment pronounced on 22/03/2017 by the Tribunal.

This detailed analysis showcases the Tribunal's thorough examination of the contractual terms, statutory provisions, and the nature of the appellant/assessee's activities to determine the applicability of service tax liability under Business Auxiliary Service. The judgment emphasizes the distinction between 'billing' activities and business auxiliary services, ultimately leading to the setting aside of the impugned order and a favorable decision for the appellant/assessee.