TMI Blog2018 (3) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... vi) fails the test of rationality. Appeal allowed - decided in favor of appellant. - Appeal No.ST/519/2010 - Final Order No. 40491 / 2018 - Dated:- 27-2-2018 - Ms. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) Ms. Radhika Chandrasekar, Advocate for the Appellant Shri K.P. Muralidharan, AC (AR) for the Respondent ORDER Per Bench The appellants are engaged in providing mailing and mail related services and are registered with the department under Business Auxiliary Services (BAS). For rendering the mailing services, appellants were using franking machine which was licensed by the Postal Department. During the course of verification of accounts, it was noticed that the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffixing physical postage stamps and by franking of the appropriate postage on the letters by making use of the licensed franking machines. As per section 17(2) of Indian Post Office Act, 1898, postage franked through franking machine is a statutory levy and therefore it cannot be considered as a consideration for the purpose of section67 of the Finance Act, 1994. The clients of the appellant had taken the demand draft for the franking charges directly in the name of Postmaster General and the same cannot be termed as a consideration for services. In case of shortage, if any, in the franking charges, appellant takes a demand draft in favour of the Postmaster General and is thereafter reimbursed by the client. The allegation of the department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Department of Posts are the clients of the appellants and, by franking the envelopes for despatch, have rendered service otherwise to be rendered by that Department to those who contracted with the appellants. 9. In our opinion, this is a superficial and casual view of the transaction. The Central Government alone can, under Section 16 of the Indian Post Office Act, 1898, cause postage stamps to be provided and also prescribe the duties and remuneration of persons selling postage stamps. Franks 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant and franks are used by the appellant to complete the task that they have undertaken in the agreement with the client, i.e., to despatch the articles. The franking charges are collected as reimbursement because the statutory mandates in the Post Office Act do not permit them to act as agent unless specifically designated under the corresponding Rules as agent. That is an entirely different function and has a statutory sanction accorded to it. Inclusion of franking cost in the service charge receivable by the appellant from the client would be contrary to the Post Office Act. Thus, the transaction of franking or usage of the postal service is solely between the appellants and the post office with the former as the customer of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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