Clerical billing and ledger work is not professional accounting service when performed by non-professional contract employees.

Outsourcing of meter reading, billing support and ledger maintenance for an electricity company did not constitute professional accounting service by a practicing chartered accountant. The work was limited to clerical and bookkeeping functions carried out by non-professional contract employees, and it did not involve the wider accountancy functions of identifying, summarising, analysing and presenting business transactions for financial statements or a balance sheet. As the statutory concept of practice under the Chartered Accountants Act was not satisfied, the activity fell outside the taxable category of professional accounting service. The Revenue's challenge failed and the relief granted to the assessee was upheld.

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Issues: Whether outsourcing of meter reading, billing and ledger maintenance for an electricity company constituted professional service of accounting rendered by a practicing chartered accountant, so as to attract service tax.

Analysis: The activity under the contract was confined to manual ledger posting, billing support, meter reading and generation of related statements for specified transactions. The work was performed by non-professional employees engaged on contract and covered by labour legislation. It did not involve the wider professional functions of accountancy, such as identification, summarisation, analysis and presentation of all business transactions leading to preparation of financial statements or a balance sheet. The definition of practice under the Chartered Accountants Act was therefore not satisfied by mere clerical or bookkeeping work.

Conclusion: The activity did not amount to professional accounting by a practicing chartered accountant and was not taxable under that category.

Final Conclusion: The Revenue's challenge failed and the orders granting relief to the assessee were upheld.

Ratio Decidendi: Mere outsourcing of clerical ledger, billing and meter-reading work to employees does not constitute the professional practice of accountancy by a chartered accountant.

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