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TMI Blog2017 (2) TMI 1148X X X X Extracts X X X X X X X X Extracts X X X X ..... of data on the consumption of electricity from the customers of MSEDCL. The activity involved taking photographs of the meter-reading at the doorsteps of customers of MSEDCL by way of digital camera and with the help of handheld programmable machine. The said data after collection was processed for raising of bills and handing over the same to the service recipients. Demand was raised against them under the head of "business auxiliary service" for the period June 2006 to March 2009. The demand was confirmed by the original adjudicating authority and upheld by the Commissioner (Appeals). However, the Commissioner (Appeals) granted the benefit on cum tax basis and penalties imposed under Section 76 and 77 were waived. However, penalty under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he removal of doubts, it is hereby declared that for the purposes of this sub-clause, inputs means all goods or services intended for use by the client. (v) production or processing of goods for, or on behalf of, the client; (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clause (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any information technology service and any activity that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andhi & Gandhi Chartered Accountants vs. CCE, Hyderabad 2010 (17) STR 25. 3. It is seen that in the case of Gandhi & Gandhi Chartered Accountants (supra), the service provided was described as computerized data processing for billing and accounts management service whereas the contract in the instant case describes the service as spot-billing with the help of handheld programmable machine. Thus it can be seen that the description of service as contracted provided in the case of Gandhi & Gandhi Chartered Accountants and in the instant case is different. In the said case, the Commissioner had not discussed specifically as to under which clause of the definition business auxiliary service the said service was classifiable. However, in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of support services of business or commerce gives indicative list of outsourced services." This clarification, by no stretch of imagination, be interpreted to mean that business auxiliary service covers only services provided on behalf of the client. 3.3 Clause (i) of Section 65(19) reads as follows :- "business auxiliary service means any service in relation to, - (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or Thus the activity of Sale of goods produced or provided by or belonging to the client would be taxable service under the Section 65(19) as business auxiliary service . Clause (vii) of the Section 65(19) reads as follows (vii) a service incidental or auxiliary to any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that they are using a handheld device and taking pictures of the meter and generating bills using a programmable device. As can be seen from the above activity, the prime purpose of the activity is to generate bills and it is only incidental that electronic programmable devices are used for this purpose. The use of this device cannot change the nature of the services. The service would have been taxable, even if they had not used these devices and simply gone to MSEDCL s customers residence and taken the reading of the bill and prepare the bill by hand and handed over to the customers with a copy to MSEDCL. The service would have still qualified to be a business auxiliary service of the activity of billing. The use of handheld devi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no general exemption to the material used during provision of the service. However, Notification 12/2003-ST provides exemption subject to certain conditions. For the purpose of availing the exemption, the appellants were required to produce evidence of sale of material to their clients. Simply by consuming the material they do not become eligible to Notification 12/2003. To avail the notification they have to prove that they had sold the goods during the provision of service to the client and produce necessary evidence like payment of VAT to establish the same. 6. The next argument raised in the appeal memorandum relates to the claim that they have acted as pure agent and therefore in terms of Rule 5(2) of the Service Tax (Determinati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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