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TMI BlogClassification - Principles of Interpretation of Specified Description of Services or Bundled ServicesX X X X Extracts X X X X X X X X Extracts X X X X ..... n. However, Section 66F has been introduced vide Finance Act, 2012 w.e.f. 1.7.2012 for the Principles of Interpretation of Specified Descriptions of Services or Bundled Services. . Input service and output service may not be same (1) Unless otherwise specified, reference to a service (herein referred to as main service) shall not include reference to a service which is used for providing main service. [ Illustration - The services by the Reserve Bank of India, being the main service within the meaning of clause (b) of section 66D, does not include any agency service provided or agreed to be provided by any bank to the Reserve Bank of India. Such agency service, being input service, used b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious services wherein an element of provision of one service is combined with an element or elements of provision of any other service or services. Manner of determining whether services are naturally bundled Also explained by CBEC , no single formula can be formulated whether a service is naturally bundled in the ordinary course of business or not. Each case has to be individually examined. As per various judgements, principles for determination of essential characteristic of a product have: -Cost of components of the product (refer case Xerox India Ltd. vs CC 2010 (11) TMI 20 - Supreme Court of India ) -Functionality of the product. (refer case CCE, Hyderabad v. Bakelite Hylam Ltd. 1997 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t understood with a below illustration - 'Provision of access to any road or bridge on payment of toll' is a specified entry in the negative list in section 66D of the Act . Any service provided in relation to collection of tolls or for security of a toll road would be in the nature of service used for providing such specified service and will not be entitled to the benefit of the negative list entry. 9.1.2 What is the scope of clause (1) of section 66F : 'where a service is capable of differential treatment for any purpose based on its description, the most specific description shall be preferred over a more general description'. This rule can also be best understood with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection (2) of section 66F , viz a specific description will be preferred over a general description as explained in para 7.1.2 above. 9.2.1 Services which are naturally bundled in the ordinary course of business The rule is - 'If various elements of a bundled service are naturally bundled in the ordinary course of business, it shall be treated as provision of a single service which gives such bundle its essential character' Illustrations - A hotel) provides a 4-D/3-N package with the facility of breakfast. This is a natural bundling of services in the ordinary course of business. The service of hotel accommodation gives the bundle the essential character and would, therefore, be treated as ser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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