Income From Sale Of Tender Forms, Xeroxing, Printing, Digital Software, Certificates Not Covered Under Business Auxiliary Services: CESTAT

The Hyderabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that income such as the sale of tender forms, xeroxing and printing, and digital software and certificates are not covered under business auxiliary services.

The bench of Anil Choudhary (Judicial Member) and A.K. Jyotishi (Technical Member) has observed that the appellant would only assist the government departments and organizations in availing or procuring various IT-related hardware and services, and for such assistance, they collect certain administrative charges. Therefore, the services of the appellant do not satisfy the definition of ‘commission agent’ so as to bring them under the category of ‘Business Auxiliary Services’.

The appellant/assessee, Andhra Pradesh Technology Services (APTS), is a government company of the state government formed for the purpose of acting as the nodal agency for the government departments of Andhra Pradesh in matters relating to the implementation and usage of information technology, under the administrative control of the ‘Information Technology and Communication Department’ of the state government.

The demand under Business Auxiliary Service was made on a value, and after considering the value on which the appellant had paid service tax, the remaining demand has been confirmed. The appellant had claimed exemption for various heads of income, such as the sale of tender forms, xeroxing and printing, and digital software and certificates, which are not covered under business auxiliary services. The claim was not allowed on the ground that the appellant had not produced any evidence in support of the claim.

The assessee is acting as a technical consultant and nodal agency to government departments and corporations for the procurement of computers and software peripherals on government orders from time to time. It assists government departments in software development and implementation. When the government departments send their requisitions to APTS along with funds, APTS identifies suitable agencies for fulfilment of the requirements of the government departments, for which APTS charges a certain percentage (administrative charges) on the value of the equipment or service arranged. In the course of the activity undertaken by APTS, they collect service charges for procurement of computers, and peripherals, evaluation of tenders, acceptance testing, funds transfer, networking, computer rentals, arranging AMC, supervision of software development, printing through agencies, computer software, digital certificate software, etc. The Show Cause Notice proposed to demand service tax from APTS under ‘business auxiliary services’.

The demand for service tax under BAS has been confirmed for the entire period of 2005–06, without accepting the claim of the appellant that they are only liable for service tax from June 16, 2005.

The tribunal noted that the adjudicating authority categorizes the activities carried out by the appellant on which the service tax was demanded under BAS. All the activities are related to IT services only. It can be seen from the definition of business auxiliary services that “information technology services” are specifically excluded during the entire period of demand in the instant case. Thus, the entire demand for service tax confirmed under BAS is liable to be dropped.

Counsel For Appellant: B. Venugopal

Counsel For Respondent: A. Rangadham

Case Title: Andhra Pradesh Technology Services Ltd Versus Commissioner of Central Tax Hyderabad - II

Case No.: Service Tax Appeal No. 361 of 2008

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