2018 (11) TMI 229 - AT - Service Tax

Classification of services - providing services like cleaning activity services , civil work in plant area, material handling, support services in I.T. department, quantity survey in plant area, water supplies service etc. - Business Auxiliary Services or not? - Held that - The bare perusal of this provision makes it clear that any activity solely for the purpose promotion of business or marketing or sale of goods related to the business and any other such activity which is directly meant for the promotion of the business can only be categorized as the business auxiliary services - From the show cause notice it is observed that the only proposition of the department is for the impugned services to be called as business auxiliary services . It is the settled law that the department cannot go beyond the scope of the show cause notice. Once the service cannot be categorized as business auxiliary service , there remains no question of demand irrespective assessee is liable for any other classification of his activity. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Whether the services provided by the appellants to M/s. N.T.P.C. fall under 'business auxiliary services' for which Service Tax is applicable.
2. Whether the Commissioner erred in dropping the demand for Service Tax except for cleaning activity services.

Analysis:

Issue 1:
The Department alleged that the services provided by the appellants to M/s. N.T.P.C. constituted 'business auxiliary services' for which the appellants had not registered themselves. The Department issued a show cause notice demanding payment of Service Tax amounting to ?66,33,634 for the period up to January 2009. The appellants contested this, leading to an appeal. The Department argued that the activities, apart from cleaning services, also fell under 'business auxiliary services'. However, the Tribunal observed that the definition of 'business auxiliary service' under Section 65(19) of the Finance Act is crucial. It includes services related to promotion, marketing, customer care, procurement of goods, production or processing of goods, provision of services on behalf of the client, and services incidental to specified activities. The Tribunal clarified that activities solely for promoting business or marketing goods related to the business can be categorized as 'business auxiliary services'. It emphasized that maintenance of premises where the business operates does not fall under this category. Consequently, the Tribunal held that the Commissioner did not err in dropping the demand as the impugned services did not qualify as 'business auxiliary services'.

Issue 2:
The Department's appeal primarily focused on challenging the dropping of the demand for Service Tax, except for cleaning activity services. However, the Tribunal noted that the Department's case was solely based on categorizing the services as 'business auxiliary services'. Since the services did not meet this classification, the demand was rightfully dropped. The Tribunal highlighted that the Department cannot exceed the scope of the show cause notice, and if an activity does not qualify as 'business auxiliary service', there is no basis for imposing the demand. The Tribunal further mentioned that the respondent did not contest the confirmation of the demand regarding cleaning services, which was not the subject of appeal. Therefore, the Tribunal upheld the order, stating that it had no infirmity, and consequently dismissed the appeal.