2014 (9) TMI 672 - HC - Service Tax

Classification - billing and accounting work executed by the assessee - Business Auxiliary Services (BAS) or Support Service of Business or Commerce (SSBC) - Held that - Section 65(104c) of the Finance Act, 1994 defines Support Service of business or commerce to mean services provided in relation to business or commerce including inter alia accounting and processing of transactions, infrastructural support services and other transaction processing. In view of the definition of the expression Support Service of business or commerce under Section 65(104c) of the Act, we are satisfied that the interpretation of the provision and application of the said provision to the transactions of the respondent-assessee is a fair view of the provision and calls for no interference. Section 65(104c) of the Act has been brought within the Service Tax net as Support Service of business or commerce , by the Finance Act, 2006 with effect from 1-5-2006. The transaction in question relates to the period 1-7-2003 to 30-9-2006. In the circumstances the Tribunal has rightly held that these transactions of the respondent-assessee, since they fall within support service of business or commerce are not liable to the charge of Service Tax for the period anterior to the incorporation of clause (104c) in Section 65 of the Finance Act, 1994 i.e., prior to 1-5-2006. - Decided in favor of assessee.

Summary

Issues:
Interpretation of "Support Service of business or commerce" under Section 65(104c) of the Finance Act, 1994 for tax liability of billing and accounting services provided to electricity companies.

Analysis:
The appeal was filed under Section 35G of the Central Excise Act, 1944 against the Customs, Excise and Service Tax Appellate Tribunal's order. The respondent-assessee provided services to electricity companies and departments, including spot billing, maintaining accounts, and software development. The appellant alleged that the respondent was providing services under Business Auxiliary Services without paying Service Tax. A show cause notice was issued, demanding Service Tax, interest, and penalties. The Commissioner confirmed the demand, leading the respondent to appeal before the CESTAT.

The Tribunal held that the billing and accounting services provided by the respondent fell under "Support Service of Business or Commerce" and not Business Auxiliary Services. The agreements with electricity companies indicated that the billing and accounting work was done for the companies, not on their behalf. The Tribunal concluded that these activities were correctly classifiable under Support Service of Business or Commerce based on the definition in Section 65(104c) of the Finance Act, 1994.

Section 65(104c) defines "Support Service of business or commerce" as services related to business or commerce, including accounting and transaction processing. The Tribunal's interpretation and application of this provision to the respondent's transactions were deemed appropriate. Since the transactions occurred before the incorporation of clause (104c) in Section 65 of the Finance Act, 1994, the Tribunal rightly held that these services were not liable to Service Tax for the period preceding 1-5-2006.

The High Court found no legal question for consideration in the appeal based on the analysis provided. Consequently, the appeal was dismissed at the admission stage.