2016 (9) TMI 235 - AT - Service Tax

Activity of preparation of identity cards for the primary school students is service tax payable on photo printing cost only or on full cost of preparation of identity cards? - photography service - Section 65(78) as well as Section 65(79) of the Finance Act, 1994 Held that - the Tribunal in the case of M/s CS Software Enterprises Ltd. 2007 (12) TMI 136 - CESTAT BANGALORE (Tri) held that preparation of photo identify card cannot be considered to fall within the ambit of photography service as per ambit of Section 65(78) as well as Section 65(79) of the Finance Act, 1994 - preparation of elector photo identify card is an activity not covered under the Photography Services demand of service tax and interest not justified penalty not imposable appeal rejected decided against Revenue.

Summary

Issues:
1. Discharge of service tax liability for Photography Service.
2. Discrepancy in service tax payment for preparing identity cards.
3. Interpretation of 'photography service' under the Finance Act, 1994.
4. Applicability of Tribunal decisions on the disputed issue.

Analysis:
1. The respondent was registered with the Service Tax Department for providing 'Photography Service' and paid service tax on the photo printing cost of identity cards. However, the Revenue alleged that the respondent should have paid service tax on the full cost of preparing identity cards, leading to recovery proceedings initiated against them.

2. The Revenue issued a show cause notice proposing a demand of ?51,313 for services provided during a specific period. The original adjudicating authority confirmed the demand, along with interest and penalty. On appeal, the Commissioner (Appeals) set aside the order, citing technical definitions of 'photography service' and relevant Tribunal decisions.

3. The Commissioner (Appeals) referred to Tribunal decisions indicating that the preparation of identity cards, specifically elector photo identity cards, does not fall under 'Photography Service' as defined under Section 65(78) and Section 65(79) of the Finance Act, 1994. The decisions highlighted that activities like preparing identity cards for sovereign purposes are not taxable under the service tax regime.

4. The Appellate Tribunal, after reviewing the Commissioner (Appeals) order and relevant Tribunal decisions, upheld the decision that the preparation of photo identity cards by the respondent for primary schools on the order of Panchayat Samiti/B.D.O.S is not taxable under 'photography service.' The Tribunal found no reason to deviate from the established interpretation and rejected the Revenue's appeal based on the consistent legal precedent.

This detailed analysis of the judgment showcases the dispute over service tax liability for photography services, the discrepancy in tax payment for identity card preparation, the interpretation of 'photography service' under the Finance Act, 1994, and the application of Tribunal decisions to resolve the issue at hand.