2007 (11) TMI 179 - AT - Service Tax

Appeal Dismissed: Services Not Taxable

COMMISSIONER OF CENTRAL EXCISE, MANGALORE Versus RAI ASSOCIATES

COMMISSIONER OF CENTRAL EXCISE, MANGALORE Versus RAI ASSOCIATES - 2008 (10) S.T.R. 194 (Tri. - Bang.) Issues Involved:1. Classification of services provided by the appellant.2. Applicability of Service Tax on the services rendered.3. Validity of the joint appeal filed by the Revenue.Detailed Analysis:1. Classification of Services Provided by the Appellant:The primary issue was whether the services provided by the appellant to M/s MESCOM were in the professional capacity of a practicing chartered accountant. The adjudicating authority had confirmed the demand of Service Tax on the grounds that the services, including opening ledger accounts, preparation of monthly bills, and maintenance of daily abstracts, were taxable services of accounting provided by a practicing chartered accountant. However, the Commissioner (Appeals) found that the services were limited to maintaining consumer details and billing-related activities, which did not amount to professional accounting services of a practicing chartered accountant. The Commissioner (Appeals) concluded that the contract was mainly for outsourcing operations of ledger maintenance and billing activities, not for availing professional accounting services. The relationship between the appellant and M/s MESCOM was that of an agent and principal, not that of a practicing chartered accountant and a client.2. Applicability of Service Tax on the Services Rendered:The second issue was whether the ledger maintenance and billing-related work done by the appellant amounted to professional accounting services liable to attract Service Tax under Notification No. 59/1998-S.T. The Commissioner (Appeals) observed that bookkeeping and ledger maintenance, although essential parts of the accounting process, did not by themselves amount to professional accounting services offered by a practicing chartered accountant. The work carried out by the appellant was confined to specific transactions related to billing and recoveries and did not involve the identification and summarization of all business transactions, analysis, and interpretation required for professional accounting. Therefore, the services provided did not fit the description of taxable services under Section 65(105)(s) and did not attract Service Tax liability.3. Validity of the Joint Appeal Filed by the Revenue:The Revenue's appeal was challenged on the grounds of maintainability. The Commissioner (Appeals) noted that the proceedings were initiated against multiple parties, and the present appeal was a joint appeal without filing separate appeals against each party. According to the CESTAT Procedure Rules, joint appeals are not maintainable. Therefore, the appeal was liable for dismissal on this ground alone. Despite this procedural flaw, the Commissioner (Appeals) also addressed the substantive issues and found no merit in the Revenue's contentions.Conclusion:The Tribunal upheld the findings of the Commissioner (Appeals) that the services provided by the appellant did not amount to professional accounting services of a practicing chartered accountant and, therefore, did not attract Service Tax liability under Notification No. 59/1998-S.T. The joint appeal filed by the Revenue was also found to be not maintainable. The appeal was accordingly dismissed, and the order of the Commissioner (Appeals) was upheld.