2006 (8) TMI 21 - Commissioner - Service Tax

Service Tax CA Ledger maintenance by practicing chartered accountants relating to billing activities of service receiver does not attract service tax Adjudicating authority disallowed declaration filed by appellant under classification of Business Auxiliary Service Impugned order

Summary

Issues:
1. Whether the services provided by the appellant to M/s. MESCOM fall under the category of "Practicing Chartered Accountant" for Service Tax liability.
2. Whether the ledger maintenance and billing work done by the appellant amount to professional service of accounting by a practicing chartered accountant.

Analysis:

Issue 1:
The adjudicating authority confirmed the demand of Service Tax on services provided to M/s. MESCOM, considering them as taxable services of accounting by a practicing chartered accountant. However, the appellant argued that the services were in the nature of Business Auxiliary Service and not provided in a professional capacity. The Commissioner analyzed the contractual responsibilities and conditions, concluding that the relationship was that of an agent and principal, not a practicing chartered accountant-client. The services provided did not meet the criteria for taxable services under Notification No. 59/1998-ST, as they were mainly related to ledger maintenance for billing activities, not specialized professional accounting services.

Issue 2:
The second issue revolved around whether the ledger maintenance and billing work done by the appellant constituted professional service of accounting by a practicing chartered accountant. The appellant contended that the services were limited to bookkeeping/ledger maintenance, not professional accounting. The Commissioner examined the scope of work, highlighting that ledger maintenance alone does not amount to professional accounting, which involves a broader range of activities beyond mere ledger upkeep. The appellant's services were focused on specific transactions related to billing and recoveries, not encompassing the full spectrum of accounting tasks required for tax liability under Notification No. 59/1998-ST.

In conclusion, the Commissioner set aside the order confirming Service Tax liability, determining that the services provided did not qualify as professional accounting by a practicing chartered accountant. The appeal was allowed, emphasizing that ledger maintenance alone does not attract Service Tax under the relevant notification.