The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed denial of service tax exemption and ruled that the implementation and usage of information technology by Andhra Pradesh Technology Services Ltd (APTS) is not business auxiliary services (BAS).
The Appellant is a government company of the State government formed for the purpose of acting as the nodal agency for the government departments of the State of Andhra Pradesh, in the matters relating to implementation and usage of information technology, under the administrative control of ‘Information technology and communication department’ of the state government.
With respect to the demand under Business Auxiliary Service [“BAS”], it is the contention of the appellant that the various Government Departments/Organisations to whom the Appellant had provided services are not engaged in any business activities, but are engaged only in various sovereign functions, the activities of the appellant cannot at all be covered under Business Auxiliary Service, in terms of the decision of the Tribunal in the case of UTI Technology Services Ltd. VS CCE.
The counsel also pointed out that the demand up to 09.07.2004 has been dropped on the ground that the Appellant is entitled to claim exemption under Notification 13/2003-ST dated 20.06.2003, while rejecting the contention of the Appellant, that the demand of Service tax, if any would arise post 16.06.2005 on account of exemption under Notification No. 14/2004-ST dated 10.09.2004, which was withdrawn vide Notification No. 19/2005-ST dated 07.06.2005 [w.e.f. 16.06.2005], on some unintelligible findings.
A Two-Member Bench of the Tribunal comprising Anil Choudhary, Judicial Member and AK Jyotishi, Technical Member observed that “A perusal of the said categorisation of services would clearly reveal that, the Appellant would only assist the Government Departments/Organisation for availing/procuring various IT related hardware/services, and for such assistance, they collect certain administrative charges. Therefore, the services of the Appellant do not satisfy the definition of ‘commission agent’ so as to bring them under the category of ‘Business Auxiliary Services’.”
“Further, with respect to exemption claim rejected on income such as, sale of tender forms, xeroxing and printing and digital software and certificates, which are not covered under business auxiliary services. This claim was not allowed on the ground that the appellant had not produced any evidence in support of the claim. However, as can be seen, they are identified clearly in the Show Cause Notice itself, therefore, the denial of exemption is incorrect” the Bench noted.
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