Ledger maintenance by chartered accountant treated as non-taxable outsourced record-keeping, not professional accounting service.

Ledger maintenance, bill preparation and related MIS work performed by a practising chartered accountant was treated as outsourced record-keeping rather than taxable professional accounting. The contract and surrounding circumstances showed that the work was done through deployed manpower under the service recipient's supervision, with remuneration linked to work done and not to professional accounting fees. Because the activity did not include the broader functions of accountancy, such as summarisation, analysis and preparation of financial statements or a balance sheet, it was not covered by the service tax entry for accounting service. The alternative classification as support services was also not applicable for the relevant period, and the demand could not be sustained.

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Issues: Whether the work of opening ledger accounts, preparation of bills, maintenance of daily abstracts, tallying, disconnection lists, MIS statements and consolidated DCB statements, carried out by a practising chartered accountant in the facts of these appeals, amounted to a professional service of accounting taxable under the service tax entry, or was merely outsourced ledger maintenance not liable to tax as such.

Analysis: The contract and surrounding circumstances showed that the work was limited to billing-related ledger maintenance and allied record preparation, undertaken through deployed manpower under the supervision of the service recipient. The service was remunerated on the basis of work done and not as a fee for professional accounting. The activity did not extend to the wider process of accountancy, such as identification, summarisation, analysis and preparation of financial statements or a balance sheet. Ledger maintenance by itself was treated as only an ingredient of accounting and not the taxable professional accounting service contemplated by the relevant service tax entry. The later alternative classification under support services was also not applicable to the period in dispute.

Conclusion: The activity was not taxable as a professional accounting service of a practising chartered accountant, and the demand could not be sustained.

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