Bill Printing and Dispatch Held Not Taxable as Business Auxiliary Service: CESTAT Sets Aside Demand [Read Order]

The Mumbai Bench of Customs,Excise and Service Tax Appellate Tribunal(CESTAT) held that the assessee’s bill printing and dispatch services were not taxable under "Business Auxiliary Service" and set aside the Rs. 24.51 crore service tax demand.

CMS Computers Ltd..appellant-assessee, filed an appeal against the order dated 31.12.2018, which confirmed a service tax demand of Rs. 24.51 crore and imposed penalties.The allegation in the SCN was that the assessee had agreements with companies like BSNL, Idea Cellular, and HDFC Bank to generate and dispatch customer bills using its own infrastructure and staff at the companies’ premises.

Based on the show cause notice dated 31.08.2006, this activity was treated as billing service, classified under "Business Auxiliary Service," and it was alleged that the assessee should have paid service tax.

In response to the show cause notices, the assessee explained that it only provided bill printing services for companies like telephone operators and municipal corporations. It installed its own machinery and staff at the customers' premises and printed bills based on the data provided by them. The assessee stated that it did not handle billing or accounting, had no access to customer accounts, and only printed and dispatched bills. It argued that its services could not be treated as "Business Auxiliary Service" as alleged.

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The Commissioner passed a common order on 31.12.2018, confirming a service tax demand of Rs. 24.51 crore with interest and imposing penalties. It was held that the assessee’s activities of bill printing and dispatch fell under "Business Auxiliary Service" as they involved not just printing but also data processing. The Commissioner also noted that the assessee had provided billing software to Tata AT&T, and upheld the extended period of limitation.

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The two member bench comprising Ajay Sharma(Judicial Member) and Anil.G.Shakkarwar(Technical Member) heard both sides, reviewed the records and submissions, and took up each service separately.For the Bill Generation, Printing, and Dispatch Service, the tribunal noted that the dispute related to the show cause notice dated 31.08.2006. The assessee had printed and dispatched bills based on the data provided by clients, using its own manpower and infrastructure. The Revenue classified this activity as "Business Auxiliary Service" under Section 65(19).

The appellate tribunal found that the assessee was only printing and dispatching bills and was not involved in calculating billing amounts, maintaining accounts, or interacting with customers. The software provided was only for designing bill formats, not for billing calculations.

Relying on earlier judgments, the tribunal held that mere bill printing and dispatch did not amount to "billing" under Business Auxiliary Service. It also noted that the assessee did not provide services on behalf of its clients, as it had no direct contact with the clients’ customers.

Accordingly, the CESTAT set aside the service tax demand related to the Bill Generation, Printing, and Dispatch Service. It did not examine the classification under "Support Services of Business or Commerce," as that category applied only after 01.05.2006.

To Read the full text of the Order CLICK HERE

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