2016 (3) TMI 572

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.... labeled before being weighed, sorted and posted. They have been in this business since 2001 and the service fee charged from the clients has been sought to be taxed under Finance Act, 1994. The rebate on franking charges of outward mail recovered in full from the clients is also sought to be taxed. 2. The Assistant Commissioner, Service Tax, Division-III, Mumbai held that the activities other than franking are, for the period from 1 st July 2003 to 31 st March 2006, in the nature of 'business auxiliary services' rendered to clients as defined in section 65(19)(iii) of Finance Act, 1994 and taxable under section 65(105(zzb) since 1 st July 2003 while franking undertaken by them was also a 'business auxiliary service' as d....

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....d, the demand on M/s Sai Mailing Services was confirmed at Rs. 2,77,035 along with interest besides imposing penalties under section 75, 76 and 77 of Finance Act, 1994. Vide order-in-appeal no. YDB/15/2012 dated 27 th February 2012, Commissioner (Appeals) modified the order of the original authority by setting aside the penalty under section 76 of Finance Act, 1994. 6. Aggrieved by these orders, appellant is before us seeking dropping of the demand and quashing the penalties. 7. Having heard the rival contentions, we cannot but be surprised by the discriminatory approach in the two impugned orders situated in identical circumstances by the same appellate authority. The more specific taxable service of 'mailing list compilation and....

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....nks are an alternative means of paying postal charges and franking machines are provided to bulk mailers. It would appear that a casual and superficial examination of the activity has been undertaken by the original and appellate authority in scrutinising the taxability. The nature of the transaction between the appellants, the entities that contracted with the appellants and the Department of Posts is essential to the task at hand considering the statutory nature of carriage of postal articles. The appellants enter into a contract with certain business entities to facilitate bulk mailing. The entire activity of dispatch is effected by the appellants on behalf the business entities and the appellants are, therefore the users of the post off....