2018 (11) TMI 171 - AT - Service Tax

Classification of services - Business auxiliary service or not? - activity of spot billing of electricity consumption charges and maintenance of customers accounts for Andhra Pradesh Central Power Distribution Company Limited (APCPDCL) - Held that - The facts are in large and the entire payment is received on the amount received as consideration for spot billing and maintenance of accounts by the appellant under an agreement with APCPDCL. The issue is no more res-integra and is decided by the Bench in the case of Karvy & Co., Sneha Consultants Pvt. LTd. vs. CCE, C&ST, Hyderabad-II 2017 (10) TMI 26 - CESTAT HYDERABAD , where it was held that the said services would not fall under the category of business auxiliary services. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Taxability of amounts received for spot billing and maintenance of accounts under business auxiliary service.
2. Interpretation of the definition of "Support Service of business or commerce" under Section 65(104c) of the Finance Act, 1994.

Issue 1: Taxability of amounts received for spot billing and maintenance of accounts under business auxiliary service:

The appeal challenged an Order-in-Appeal confirming demands for service tax on amounts received for spot billing and maintenance of accounts by the appellant for a power distribution company. The appellant argued that these activities do not fall under the category of business auxiliary service. The lower authorities upheld the demands and penalties. The appellant cited precedents to support their case, emphasizing that the issue was already decided by the Bench in a previous case. The Tribunal noted that the entire payment was received for these services under an agreement with the power distribution company. Citing the judgment of the High Court, the Tribunal found that the activities fell under the category of "Support Service of Business or Commerce" and not business auxiliary service. As a similar issue was already decided by the High Court, the impugned order was set aside, and the appeal was allowed.

Issue 2: Interpretation of the definition of "Support Service of business or commerce" under Section 65(104c) of the Finance Act, 1994:

In a related case, the respondent-assessee provided services to electricity companies, including spot billing, maintaining accounts, and software development. A show cause notice was issued for non-payment of service tax under the category of Business Auxiliary Services. The Tribunal held that the activities were taxable under "Support Service of Business or Commerce" and not as business auxiliary services. Analyzing the agreements, the Tribunal concluded that the billing and accounting work done by the assessee fell under the definition of "Support Service of Business or Commerce." Citing the relevant provisions of the Finance Act, the Tribunal found that the transactions were correctly classified under this category. The Tribunal dismissed the appeal, stating that no question of law required consideration. The Tribunal upheld the interpretation of the provision and its application to the transactions of the respondent-assessee, leading to the conclusion that the activities were not liable to service tax for the period before the relevant provision was incorporated.

This comprehensive analysis of the judgment highlights the key legal issues, arguments presented, precedents cited, and the Tribunal's findings on the taxability of services provided for spot billing and maintenance of accounts under the relevant service tax category.