2016 (7) TMI 502 - AT - Service Tax

Taxability of photography service provided for carrying works of preparation of Elector s Photo Identity Card (EPIC) i.e. Matdan Pahchan Patra. - Held that - the work done by the appellant in respect of preparation of EPIC under agreement with the Governor or the State functionaries, was a sovereign activity of the State/Union and accordingly, the said activity is held not taxable. Similar views have been expressed by the CBEC in their Circular dated 18.12.2006 - Demand set aside - Decided in favor of assessee.

Summary

Issues:
Whether the appellant, a service provider, is liable to service tax for preparing Elector's Photo Identity Card (EPIC).

Analysis:
The appellant was issued a show-cause notice (SCN) for allegedly providing photography services under the Finance Act, 1994. The appellant had entered into an agreement with the State of Jharkhand for preparing EPICs and received service charges for the same. The appellant contended that the preparation of EPIC is a sovereign activity and not taxable under the Act. They cited a Tribunal ruling that supported their stance.

The Additional Commissioner disregarded the Tribunal ruling and confirmed a duty liability on the appellant. Subsequently, the Commissioner (Appeals) upheld the decision, leading to the appellant appealing to the Tribunal. The appellant argued that the impugned order ignored binding Tribunal rulings and pointed to cases where activities related to sovereign functions were deemed non-taxable.

The appellant's counsel highlighted the Tribunal's previous decisions and a CBEC Circular, emphasizing that activities performed by public authorities under specific laws for public interest are not taxable services. They argued that the preparation of EPICs falls under sovereign activities and should not be subject to service tax. The appellant also claimed that the demand was time-barred, with no suppression of facts.

After considering the arguments, the Tribunal held that the preparation of EPICs by the appellant, under an agreement with the State, constituted a sovereign activity and was not taxable. The Tribunal referenced the CBEC Circular supporting their decision and set aside the impugned order, allowing the appeal with consequential relief as per the law.