Custom, Excise & Service Tax Tribunal
M/S. Atlas Documentary Facilitators ... vs Commissioner Of Service Tax, Mumbai-I on 16 June, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. ST/260/12 (Arising out of Order-in-Appeal No. YDB/01/2012 dt. 27.01.2012 passed by the Commissioner of Central Excise (Appeals) Mumbai-IV ) For approval and signature: Honble Mr. Ramesh Nair, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) ============================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
======================================================= M/s. Atlas Documentary Facilitators Company Pvt. Ltd.
:
Appellant VS Commissioner of Service Tax, Mumbai-I :
Respondent Appearance Ms. Aparna Hirandagi, Advocate for Appellant Shri B.K. Iyer, Supdt. (A.R) for respondent CORAM:
Honble Mr. Ramesh Nair, Member (Judicial)
Honble Mr. C.J. Mathew, Member (Technical)
Date of hearing : 16/06/2016
Date of pronouncement : 17/10/2016
ORDER NO.
Per : Ramesh Nair
Appellant is engaged in providing back end support services for its sole client M/s. HDFC Bank Ltd. They are registered for service tax under following categories:
a. Management Consultancy Services w.e.f. 8-8-2000 b. Business Auxiliary Services w.e.f. 5-10-2006 c. Business Support Services w.e.f. 31-3-2010 Appellant provides various distinct services to the bank. One such services is printing of statement/cheque books/pay slips and various other reports for the bank. Necessary stationary for printing is supplied by the bank. In consideration for its services the appellant charges a fee. During the period of dispute appellant paid services tax on all the services provided to the bank except on printing services. As regard the printing services during the course of audit, department observed that the printing services provided by the appellant to the bank is classifiable under Business Auxiliary Services and liable for service tax for which two show cause notices bearing No. ST/DN-V/AR/ADFCPL/135/2004/2877 dated 16-1-2006 for the period 1-7-2003 to 31-3-2004 and second show cause notice No. ST/DV-V/ATLAS/SCN/35/4348 dated 14-10-2009 for the period 1-4-2004 to 31-3-2005 were issued wherein demand of service tax on the printing services for an amount of Rs. 13,79,223/- and Rs.14,85,327/- respectively were proposed. In addition, in the first show cause notice, a demand of Cenvat amount of Rs. 3,41,266/- was also proposed. In the first show cause notice demand on printing service was raised under the category of BAS more particularly under clause (iv) of Section 65(19) of the Act viz. incidental and other services. Both show cause notices were adjudicated and all the proposed in the show cause notices were confirmed vide Order-in-Original No. 11&12/STC/SM/09-10 dated 23-02-2010. Being aggrieved by the said order of the original adjudicating authority appellant filed appeal before Commissioner(Appeals) who vide impugned order upheld the order of the Original adjudicating authority to the extent of confirmation of demand under first show cause notice dated 16-1-2006 and disallowing input credit on insurance policies and allowed appeal partly to the extent it relates to demand under subsequent show cause notice dated 14-10-2009 as being time bar accordingly Order-in-Original stands modified. Being aggrieved by the part of the impugned order, the appellant filed the present appeal.
3. Ms Aparna Hirandagi, Ld. Counsel for the appellant submits that the demand for the period 1-7-2003 to 31-3-2004 relevant in the present appeal for the Rs. 13,79,223/- was confirmed on printing services under the category of Business Auxiliary services under clause (iv) of Section 65(19) of the Act. She submits that as regard entry under clause (iv) of Section 65(19) only services which incidental or auxiliary to the services specified under clause (i) to (iii) therefore the entry under clause (iv) is not independent, it is in respect of services mentioned in clause (i) to (iii). The subject service i.e. printing service does not relate to services mentioned in any of the clause (i) to (iii) therefore it cannot be called as incidental or auxiliary services. She further submits that the services in question more particularly can be categorised under Business Support Services which was not taxable during the relevant period and became taxable only under Section 65(104c) w.e.f. 1-5-2006. In this regard she placed reliance on Honble Andhra Pradesh High Court judgment in case of CCE & C Visakhapatnam-I Vs. Phonix IT Solutions Ltd. [2014(35) STR 314(AP)]. As regard issue of disallowance of Cenvat credit on the premium of insurance policies for an amount of Rs. 45,525/- she submits that insurance policies were taken by the appellant for the employees of the appellants company which is under the statutory obligation therefore these services are essential for function of the appellants business, hence it is clearly input services and credit should be allowed. She submits that as per the Rule 2(1)(c) of Service Tax Credit Rules, 2002 the credit is allowed on the input services which received and consumed by service provider in relation to rendering the output service. In the present case there is no dispute that insurance services were received and consumed by the appellant in relation to rendering output service through their employees therefore insurance policies in respect of the employees for which premium is paid by the company clearly falls under the definition of input service and same is admissible for taking credit in terms of Service Tax Credit Rules, 2002.
4. Shri. B. K. Iyer, Ld. Superintendent (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order.
5. We have carefully considered the submissions made by both sides.
6. The issue to be decided in the present appeal are (1) whether the printing service provided by the appellant to M/s. HDFC Bank Ltd during the period July, 2003 to March, 2004 falls under the category of Business Auxiliary Services Clause (iv) and liable for service tax. (2) whether input service credit in respect of service tax paid on the premium of insurance policies of employees is admissible in terms of Service Tax Credit Rules, 2002.
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 appellants 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 appellants 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). On careful reading of judgment in case of the Phoenix IT Solutions Ltd. (supra) it is observed that in the said judgment more or less similar services such as spot billing, maintaining account etc were held to be classifiable as Business Support Service falling under Section 65(104c) of Finance Act, 1994 and not under Business Auxiliary Services. The Business Support Service became taxable w.e.f. 1-5-2006 therefore the appellants services being similar, more appropriately classifiable as Business Support Service and the same was not taxable during the period involved in the present case. As per the above discussions and the issue being squarely covered by Honble Andhra Pradesh High Court in case of Phoenix IT Solutions (supra), we are of the considered view that demand of service tax on the printing service provided by the appellant is not taxable. Therefore demand of service tax and consequential penalty and interest are set aside. 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 appellants 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. Some of the judgments are referred below:
(i) Commissioner of C. Ex., Nagpur Vs.Ultratech Cement Ltd.
2010 (20) STR 577 (Bom.)
(ii) Commr. of C.Ex., Bangalore-III Vs. Stanzen Toyotetsu India (P) Ltd.
2011 (23) S.T.R. 444(Kar.)
(iii) Commissioner of C. Ex., Bangalore-II Vs. Millipore India Pvt. Ltd.
2012 (26) S.T.R. 514 (Kar.)
(iv) Commissioner of Central Excise Vs. HCL Technologies 2015 (37) S.T.R. 716 (All.)
(v) Commissioner of C.Ex. Raipur Vs. Mahamaya Steel Industries.
2011 (24) S.T.R. 124 (Tri.-Del.)
(vi) Semco Electric Pvt. Ltd. Vs. Commissioner of Central Excise, Pune-I 2013 (30) S.T.R. 572 (Tri.-Mumbai)
(vii) Commr. of S.T., Chennai Vs. Ford Business Services Centre Pvt. Ltd. 2015 (38) S.T.R. 700 (Tri.-Chennai).
As per the above view of the Benches of the Tribunal, the service tax credit in respect of insurance policy is admissible, hence following the ratio of the above judgments, we allow the service tax credit in respect of insurance policy. The impugned order stands modified to the above extent. Appeal is allowed with consequential relief, if any, in accordance with law.
(Pronounced in court on 17/10/2016 )
(C.J.Mathew)
Member (Technical)
(Ramesh Nair)
Member (Judicial)
sm.
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