2006 (8) TMI 12 - Commissioner - Service Tax

Service Tax Practicing Chartered Accountant Ledger maintenance by practicing chartered accountants relating to billing activities of service receiver does not attract service tax All professional services are not liable to tax unless figured in list of taxable services

Summary

Issues:
1. Whether the services provided by the appellant to M/s. MESCOM fall under the category of "Practicing Chartered Accountant" for the purpose of Service Tax liability.
2. Whether the ledger maintenance and billing related work done by the appellant amount to professional service of accounting by a practicing chartered accountant attracting Notification No. 59/1998-ST for levy of Service Tax.

Analysis:

Issue 1:
The appellant contended that the services provided to M/s. MESCOM were not in his professional capacity as a practicing chartered accountant but were of a general nature that could be undertaken by individuals with basic accounting knowledge. The adjudicating authority, however, held that the services fell under the category of "Practicing Chartered Accountant," confirming a Service Tax demand along with interest and penalty. The appellant argued for classification under Business Support Services introduced in 2006. The Commissioner found that the contract was for outsourcing ledger maintenance operations related to billing activities, not for professional accounting services. The relationship was deemed that of an agent and principal, not a practicing chartered accountant and client, leading to the conclusion that the services did not attract Service Tax liability.

Issue 2:
Regarding whether the ledger maintenance and billing work constituted professional service of accounting by a practicing chartered accountant, it was established that the appellant's tasks were limited to specific transactions like billing and recoveries, not encompassing the full scope of professional accounting services. The Commissioner noted that ledger maintenance, while essential, did not amount to professional accounting services as required by Notification No. 59/1998-ST. The appellant's services were deemed to be within the realm of ledger maintenance, not professional accounting, as they did not involve all processes necessary for producing a balance sheet. The Commissioner concluded that the ledger maintenance services provided did not attract Service Tax liability under the said notification.

In summary, the Commissioner allowed the appeal, setting aside the order confirming the Service Tax liability, as the services provided by the appellant were not considered professional accounting services by a practicing chartered accountant, thus not attracting Service Tax under Notification No. 59/1998-ST.