Commissioner, Custom and Central Excise vs Smart Chip Limited

This is revenue''s appeal under sub-section (1) of Section 35-G of the Central Excise Act, 1994, calling in question tenability of an order-dated 2.12.2011, passed by the Customs Excise and Service Tax Appellate Tribunal, Principal Bench, New Delhi.

A contract was entered into by the respondent assessee with the State of Madhya Pradesh on 9.10.2001 for carrying out various activities � details of which are indicated in the contract agreement, particularly with reference to the scope of work as indicated in Clause 4.1 of the Agreement, available at page 118 of the paper-book. The same amounts to �business auxillary service� and liable to be assessed for payment of service tax in accordance to the provisions of section 65(19) of the Finance Act, 1994 and holding that the activities do not amount to �business auxillary service�, the learned Tribunal having quashed the order of assessment, this appeal by the revenue.

It was found by the Tribunal that the activities carried out by the assessee pertains to establishing service centers in different offices of the Transport Department and found that the same does not amount to service taxable under the service tax provisions and does not fall within the purview of �business auxillary service�. The service rendered to public authorities in the manner and the question of payment of service tax on such service is considered not only by the Delhi High Court and answered in favour of the assessee as referred to by the learned Tribunal in paragraph 8 of the impugned order, but from the return filed by the respondents it is seen that vide Circular dated 18.12.2006, the Ministry of Finance in the Department of Revenue, Central Board of Excise and Customs, has also clarified with regard to applicability of service tax on fee collected by public authorities while performing statutory functions and duties under the provisions of law.

In the present case, the work done by the respondent assessee pertains to discharge of statutory function by the Department under the Motor Vehicle Act and the same does not amount to customer care, promotion, marketing of services, incidental or auxillary to the support services.

In the case of Associated Provincial Picture Houses Limited v. Wednesbury Corporation, (1948) 1 K.B. 223, the Tribunal under similar circumstances has held that service rendered for preparation of voter identity card is not a �business auxillary service� coming within the purview of section 69(19) of the Finance Act, 1994.

Shri Sumit Nema, learned counsel for the respondent, has produced before us a copy of the order passed by the Central Excise Tribunal in the case of Ankit Consultancy Limited (supra), wherein after placing reliance on various judgments of the Supreme Court, the matter has been decided.

Keeping in view the aforesaid and the definition of �business auxillary service�, as is defined under section 65(19) and on evaluating the same in the backdrop of the service being rendered by the assessee for the Transport Department under the Motor Vehicle Act, we find no error in the order passed by the Tribunal warranting reconsideration nor does any substantial question of law arises for consideration in this matter.

Accordingly, finding no error in the order passed by the Tribunal, this appeal is dismissed.