By TIOL News Service

MUMBAI, FEB 16, 2015: THE appellant is providing services on behalf of M/s. Modi Xerox Ltd. for maintenance and repairs of the machines provided by M/s. Modi Xerox Ltd. For this purpose they had entered into a service agreement with M/s. Modi Xerox.

The jurisdictional authorities were of the view that the appellant has provided 'repairs and maintenance service' during the period 01.07.2003 to 30.06.2004 and is liable to be taxed under the said category.

As the lower authorities upheld the allegations and confirmed the ST demand, the appellant is before the CESTAT.

The appellant referred to the agreement entered with M/s. Modi Xerox and submitted that they had carried out repair and maintenance service on behalf of M/s. Modi Xerox and they raised the bill against M/s. Modi Xerox for the services rendered. Further, M/s. Modi Xerox, in turn, billed the person who has purchased the Xerox machines. Inasmuch as M/s. Modi Xerox has given a certificate indicating that they have discharged service tax liability on repair and maintenance services of the machines which were serviced or attended by the appellant. It is also mentioned that that they are paying service tax liability under 'Business Auxiliary Services'. w.e.f. 10/09/2004 pursuant to the additional clause No. (vi) inserted in the definition by the Finance Act, 2004.

The AR did not budge from the stand taken by the lower authorities.

The Bench inter alia observed -

++ On perusal of the records it transpires that the appellant's contract with M/s. Modi Xerox is termed as a service agreement and it lays down the obligations to be provided by the appellant which includes necessary service of the products assigned by M/s. Modi Xerox. It is also on record that the appellant is billing M/s. Modi Xerox for the services rendered by him in the territory to which he has been assigned. We find that the appellant's contention that they are not covered under the 'repair and maintenance service' is having strong force inasmuch as the certificate issued by M/s. Modi Xerox indicates that they have directly billed the customers, for the repairs and maintenance which has been attended to by the appellant herein.

++ Viewed from another angle, we find that 'business auxiliary service' definition prior to 10/09/2004 read as under:

" '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

(ii) promotion or marketing of service provided by the client; or

(iii) any customer care service provided on behalf of the client; or

(iv) any incidental or auxiliary support service such as billing, collection or recovery of cheques, accounts and remittance, evaluation or development of prospective customer and public relation services.

and includes services as a commission agent, but does not include any information technology service.

Explanation- For the removal of doubts, it is hereby declared that for the purposes of this clause, 'information technology service' means any service in relation to designing, developing or maintaining of computer software, or computerized data processing, or system networking, or any other service primarily in relation to operation of computer systems;"

From a plain reading of the above definition, we find that there is no clause for taxing the services or providing the services on behalf of the client. Subsequently, by Finance (no. 2) Act, 2004 w.e.f. 10.09.2004 additional clause No. (vi) was introduced which reads as under:

"(vi) provision of service on behalf of the client."

++ It can be noticed from the facts which are reproduced above the appellant is providing services on behalf of M/s. Modi Xerox who are his client. This would indicate that the appellant is liable to service tax under 'business auxiliary service' w.e.f. 10.09.2004 to which we were informed by the Chartered Accountant that they are doing so.

In fine, the order was set aside and the appeal was allowed with consequential relief.

(See 2015-TIOL-339-CESTAT-MUM)