ST - BAS - Printing of cheque book services provided cannot be considered incidental or auxiliary to services mentioned in clause (i) to (iii) and, therefore, would not fall under clause (iv) of Sec 65(19): CESTAT
By TIOL News Service
MUMBAI, NOV 03, 2016: APPELLANT is engaged in providing back-end support services for its sole client HDFC Bank Ltd. and are registered under the category of Management Consultancy Services, BAS & BSS.
Appellant provides various distinct services to the bank. One such service is printing of statement/cheque books/pay slips and various other reports for the bank. Necessary stationery for printing is supplied by the bank. In consideration for its services the appellant charges a fee. During the period of dispute, appellant paid service tax on all the services provided to the bank except on printing services.
Two SCNs demanding ST of Rs.13,79,223/- [Period 1-7-2003 to 31-3-2004; SCN dated 16-1-2006] and Rs.14,85,327/- [Period 1-4-2004 to 31-3-2005; SCN dated 14-10-2009] respectively on the said printing services classified under BAS were issued. The first SCN adverted to clause (iv) of section 65(19) of FA, 1994 while demanding ST under BAS. CENVAT credit allegedly wrongly availed of Rs.3,41,266/- was also demanded in first SCN.
Against the confirmation of demands, the appellant approached the Commissioner(A) who confirmed the demand of ST in the first SCN along with denial of CENVAT availed in respect of Insurance policies. However, in respect of the second SCN, it was held that the entire demand was time barred.
The appellant is now before the CESTAT. Whether Revenue is aggrieved is not known.
It is submitted that the entry under clause (iv) of section 65(19) is not independent in the sense that it is in respect of services mentioned in clause (i) to (iii). As the printing service does not relate to services mentioned in any of the clauses (i) to (iii), it cannot be called as incidental or auxiliary services. Furthermore, the services in question are aptly classifiable under Business Support Services and the same was not taxable during the relevant period but became taxable only under Section 65(104c) w.e.f. 1-5-2006.
As regards CENVAT credit, it is submitted that insurance policies were taken for the employees of the appellant's company which is under the statutory obligation, therefore, these services are essential for functioning of the appellant's business, hence it is clearly input services and credit should be allowed.
The AR reiterated the findings of the impugned order.
The Bench inter alia observed -
Printing Service, whether BAS?
As regard the first issue, we find that adjudicating authority as well as first appellate authority confirmed the demand of service tax under the category of Business Auxiliary Service particularly under clause (iv), the said provisions is reproduced below:-
"Section 65 (19) "Business Auxiliary Service" means any service in relation to:-
(i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or
(ii) promotion or marketing of service provided by the client; or
(iii) any customer care service provided on behalf of the client; or
(iv) any incidental or auxiliary support service such as billing, collection or recovery of cheques, accounts and remittance, evaluation of prospective customer and public relation services".
As per the clause (iv) any incidental or auxiliary support services are covered. It is appellant's submission that the term ‘incidental or auxiliary support service' cannot be read in isolation. The incidental or auxiliary support service has to be in context with some main services, we are of the view that after clause (i) to (iii) under clause (iv) incidental or auxiliary support service has to be considered with relation to services mentioned under clause (i) to (iii), therefore even if the contention of the Revenue is accepted that the appellant's services is liable to be covered under clause (iv) then by going through the services provided under clause (i) to (iii) printing services provided by the appellant cannot be considered as incidental or auxiliary services to the services mentioned in clause (i) to (iii). Therefore printing service would not fall under the category of Business Auxiliary Services. Moreover, even if the clause (iv) is considered independently, we find that printing services of the appellant is independent service which cannot be treated as incidental or auxiliary to any of the service, for this reason also printing service would not fall under clause (iv) of Section 65(19).
Thedemand of service tax and consequential penalty and interest were set aside.
CENVAT:
As regard the service tax credit in respect of insurance services. It is observed that all the three insurance policies are for the employees of the appellant's company. The issue whether this service are in or in relation to providing output service, has been considered in various judgments and it was held that the insurance of the employees is the service which is used in providing output service.
(i) Ultratech Cement Ltd. - 2010-TIOL-745-HC-MUM-ST
(ii) Stanzen Toyotetsu India (P) Ltd. - 2011-TIOL-866-HC-KAR-ST
(iii) Millipore India Pvt. Ltd. - 2012-TIOL-1929-CESTAT-BANG
(iv) HCL Technologies - 2014-TIOL-2001-HC-ALL-CX
(v) Mahamaya Steel Industries - 2016-TIOL-1099-CESTAT-DEL
(vi) Ford Business Services Centre Pvt. Ltd. - 2015-TIOL-885-CESTAT-MAD
The Appeal was allowed with consequential relief.
(See 2016-TIOL-2860-CESTAT-MUM)
