TaxTMI 
TaxTMI 
2018 (3) TMI 114
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....e course of verification of accounts, it was noticed that the appellant received service charges along with the postage amount from the client for the mailing services rendered to them. It was also noticed that appellants received rebate from the Postal Department for handling the bulk mail by using the franking machine supplied by the Postal Department. It appeared to Revenue that the rebate is paid by the Postal Department as a consideration for procuring / placing bulk volume of business to the Postal Department which amounts to promotion or marketing of the postal services rendered by appellant. Accordingly, show cause notice was issued for an amount of Rs. 57,23,682/- being the service tax under BAS along with interest and also for imp....
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....rsed by the client. The allegation of the department that such franking charges are consideration for the services rendered by the appellant and is liable to levy of service tax under BAS is without legal basis. The rebate given to the appellant from the Postal Department cannot be subject to levy of service tax as there is no service provider client relationship in such transaction. According to MEMO of the Postal Department, 3% rebate is allowed for the use of the franking machines which is an independent concession and cannot be termed as consideration for services. She submitted that the issue stands clearly covered by the decision in the case of United Mailing Services Vs. Commissioner of Service Tax, Mumbai 201....
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....he 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 despatch is effected by the appellants on behalf of the business entities and the appellants are, therefore, the users of the post office. The business entities that contract with the appellants do not approach the post office for any service. This has been acknowledged by the original and appella....