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TMI Blog2018 (8) TMI 425X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay service tax as according to the department, the preparation of EPIC includes taking of photographs of voters by Digital Camera, processing, lamination and, therefore, such authority comes within the purview of photography service. According to the department the petitioner is liable to pay service charges. Learned Senior Advocate for the petitioner has submitted that, the authorities in issuing the show-cause notice did not take into account the agreements subsisting between the Electoral Officers of West Bengal and Bihar. He has also referred to a letter dated January 22, 2007 issued by the Deputy Chief Electoral Officer where the rates were approved. He has submitted that, photography is one of the several activities which a person has to undertake in order to produce an EPIC. The differential rates mentioned in the letter dated January 22, 2007 of the State of West Bengal would establish that, the value of taking photograph is about of 5.5% of the price of the complete EPIC. The petitioner is not a photography studio or agency within the meaning of Sub-section (79) of Section 65. The petitioner does not come under the purview of Sub-Clause (3b) of Clause (105) of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a breakup of the contract. The contracts cannot be broken up into different segments and one segment be made chargeable to Service Tax. In support of his contentions, he has relied upon 2015 (39) S.T.R. page 913 (S.C.) (Commissioner of C. Ex. & Cus., Kerala v. Larsen & Toubro Ltd.), Circular No. 104/7/2008-S.T. dated August 6, 2008, Circular No. 334/1/2008 dated February 29, 2008, Circular No. 334/4/2006-TRU dated February 28, 2006, 2007 Volume 7 S.T.R. page 702 (Tri. Bang.) (Commissioner of Cus. & C. Ex., Hyderabad-II v. CMC Limited), 2013 (31) S.T.R. page 523 (Guj.) (Commissioner of Service Tax v. Sujal Developers), and 2006 Volume 3 Supreme Court Cases page 1 (Bharat Sanchar Nigam Ltd. & Anr. v. Union of India & Ors.). He has submitted that, the impugned show-cause notice should, therefore, be quashed. Learned Additional Solicitor General appearing for the respondents has submitted that, since the petitioner has not pressed the challenge to the vires of the various provisions of the Act, then, the show-cause notice cannot be said to be without jurisdiction. A Writ Court need not interfere when a show-cause notice is under challenge. The issues raised by the petitioners with reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia), 2005 Volume 13 Supreme Court Cases page 37 (C.K. Jidheesh v. Union of India & Ors.), All India Reporter 1925 Patna page 717 (Daroga Gope v. King-Emperor) and 2007 Volume 7 Supreme Court Cases page 347 (Collector of Central Excise & Ors. v. Solaris Chemtech Ltd. & Ors.). He has submitted that, the widest possible meaning should be taken into consideration in the context of Service Tax. The petitioner is a Government of West Bengal undertaking and is primarily engaged in the business of software technology. Election Commission of India introduced the system of issuing Electoral Photo Identity Card (EPIC) to the citizens of India. Election Commission took the assistance of the petitioner for preparation of EPIC. The petitioner was awarded a contract by the District Election Officer, Muzaffarpur, Bihar by an agreement dated May 31, 2005. The Electoral Officer of the State of West Bengal issued letters dated March 11, 2005 and January 22, 2007 to the petitioner for preparation of EPIC for the State of West Bengal. Whether preparation of EPIC by the petitioner attracts Service Tax, is the issue raised in the writ petition. The parties have referred to and relied upon Sections 65( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s including pouch filling, bottling, labeling or imprinting of the package, but does not include any packaging activity that amount to "manufacture" within the meaning of clause (f) of section 2 of the Central Excise Act, 1944(1 of 1944) ........................................................................ .... (78). "photography" includes still photography, motion picture photography, laser photography, aerial photography or fluorescent photography; (79). "photography studio or agency" means any professional photographer or [any person] engaged n the business of rendering service relating to photography; ........................................................................ ... (105)(zb). "taxable service" means any service provided[or to be provided],- ........................................................................ ..... (zb) to a customer, by a photography studio or agency in relation to photography, in any manner; ........................................................................ ..." "65A. (1) For the purposes of this Chapter, classification of taxable services shall be determined according to the terms of the sub-clauses of clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice, and such taxable service shall be treated as if the recipient had himself provided the service in India, and accordingly all the provisions of this Chapter shall apply: Provided that where the recipient of the service is an individual and such service received by him is otherwise than for the purpose of use in any business or commerce, the provisions of this sub- section shall not apply: Provided further that where the provider of the service has his business establishment both in that country and elsewhere, the country, where the establishment of the provider of service directly concerned with the provision of service is located, shall be treated as the country from which the service is provided or to be provided. Explanation 1.-A person carrying on a business through a branch or agency in any country shall be treated as having a business establishment in that country. Explanation 2.-Usual place of residence, in relation to a body corporate, means the place where it is incorporated or otherwise legally constituted." "67. Valuation of taxable services for charging service tax. - (1) Subject to the provisions of this Chapter, service tax chargeable on any taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w should not be artificially split. The method of charging or invoicing does not in itself determine whether the service provided is a single service or multiple services. Single price normally suggests a single supply though not decisive. The real nature and substance of the transaction and not merely the form of the transaction should be the guiding factor for deciding the classification. The department had issued a third Circular bearing No. 104/7/2008-S.T. dated August 6, 2008. It had opined that, both the form and substance of the transactions are to be taken into account. The guiding principle is to identify the essential features of the transaction. Whether Service Tax can be levied on indivisible works contracts prior to the introduction on June 1, 2007 on the Finance Act, 2007 have come up for consideration in Larsen & Toubro Ltd. (supra). It had held that, there was no charge pre 2007 and that, there was no machinery provisions as well to bring indivisible works contracts under the Service Tax net. In the present case, the three writings, one by the District Election Officer, Muzaffarpur and two by the Electoral Officer of the Government of West Bengal relate to prepara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the seller in connection with the construction of residential complex till the execution of the sale deed would be in the nature of self-service and consequently would not attract Service Tax. Applying such analogy to the facts of the present case, taking a photograph of a person in the process of preparation of EPIC, would be self-service and would not attract Service Tax. Kerala Colour Lab. Association (supra) has considered 2000 Volume 2 Supreme Court Cases page 385 (Rainbow Colour Lab & Anr. v. State of M.P.). It has held that, Rainbow Colour Lab & Anr. (supra) has been doubted in 2001 Volume 4 Supreme Court Cases page 593 (Associated Cement Companies Ltd. v. Commissioner of Customs). It has held that, when the taxable event has been determined as service rendered, and not sale of goods, irrespective of whether it is a works contract or a contract of sale of goods, the taxable event would occur. The taxable event occurs because of the service rendered. Merely because the measure or valuation of tax is linked to the gross consideration received in the transaction, it does not determine the nature of tax. The taxable event determines the true event of tax. The measure of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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