Service provider wins appeal on service tax for EPIC preparation, deemed sovereign activity exempt from tax.

The Tribunal ruled in favor of the appellant, a service provider, in a case concerning liability for service tax on preparing Elector's Photo Identity Cards (EPICs). The Tribunal held that the preparation of EPICs by the appellant under an agreement with the State constituted a sovereign activity and was not subject to service tax under the Finance Act, 1994. The Tribunal cited a CBEC Circular and set aside the previous decision, allowing the appeal with consequential relief.

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Issues:
Whether the appellant, a service provider, is liable to service tax for preparing Elector's Photo Identity Card (EPIC).

Analysis:
The appellant was issued a show-cause notice (SCN) for allegedly providing photography services under the Finance Act, 1994. The appellant had entered into an agreement with the State of Jharkhand for preparing EPICs and received service charges for the same. The appellant contended that the preparation of EPIC is a sovereign activity and not taxable under the Act. They cited a Tribunal ruling that supported their stance.

The Additional Commissioner disregarded the Tribunal ruling and confirmed a duty liability on the appellant. Subsequently, the Commissioner (Appeals) upheld the decision, leading to the appellant appealing to the Tribunal. The appellant argued that the impugned order ignored binding Tribunal rulings and pointed to cases where activities related to sovereign functions were deemed non-taxable.

The appellant's counsel highlighted the Tribunal's previous decisions and a CBEC Circular, emphasizing that activities performed by public authorities under specific laws for public interest are not taxable services. They argued that the preparation of EPICs falls under sovereign activities and should not be subject to service tax. The appellant also claimed that the demand was time-barred, with no suppression of facts.

After considering the arguments, the Tribunal held that the preparation of EPICs by the appellant, under an agreement with the State, constituted a sovereign activity and was not taxable. The Tribunal referenced the CBEC Circular supporting their decision and set aside the impugned order, allowing the appeal with consequential relief as per the law.

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