Whether meter reading, preparation of monthly energy bill and its delivery to customers fall under BAS?

PJ/CASE LAW/2015-16/2833

Case:-JHARKHAND SOFTWARE & HARDWARE (P) LTD. VERSUS COMMISSIONER OF C. EX. & S.T., RANCHI

Citation:- 2015 (39) S.T.R. 842 (Tri. - Kolkata)

Brief facts:- The appellant were rendering various services to M/s. Jharkhand State Electricity Board. The department classified these services under “Business Auxiliary Services”. The appellant filed an application for waiver of pre-deposit of service tax of Rs. 7.49 lakhs and equal amount of penalty imposed under Section 78, penalty of Rs. 5,000/- under Section 77 and penalty (not quantified) under Section 76 of the Finance Act, 1994.

Appellant’s contention:- At the outset, the ld. Consultant for the applicant submitted that the applicants were rendering various services to M/s. Jharkhand State Electricity Board. The services rendered by them consisted of meter reading, preparation of monthly energy bill, delivery of the bills to customers, surveillance of meter, processing, preparation and supply of consumer ledger and other statements in the prescribed proforma of the said Electricity Board. It was his submission that they were not rendering services “on behalf” of the client, but “to the client” and hence, the definition of ‘Business Auxiliary Service’ prescribed under Sections 65(19) of the Finance Act, 1994, had not been satisfied in the present case, accordingly, no service tax was leviable on the same.

Respondent’s contention:-On the other hand, the ld. AR appearing for the Department, submitted that the applicants were providing services to the consumers of the said Electricity Board. Hence, in the present case, the services were provided on behalf of the client, hence, the definition of ‘Business Auxiliary Service’, particularly Clauses (vi) & (vii) were satisfied in the present case.

Reasoning of judgement:- Both the sides were heard and records were pursued. Prima facie, it was found that the applicants were providing service to the Jharkhand State Electricity Board, which comprised of meter reading, preparation of monthly energy bill, delivery of the bills to customers, preparation and supply of consumer ledger etc., which, prima facie, fell under the category of “Business Auxiliary Service” as defined under Section 65(19)(vi)(vii) of the Finance Act, 1994. Prima facie, it was found that in the present case, there are three parties involved, namely, (i) the applicant, (ii) Jharkhand State Electricity Board & (iii) the Customer of the Jharkhand State Electricity Board. Thus, these services were rendered on behalf of the Client (Jharkhand State Electricity Board) to the consumer of the Jharkhand State Electricity Board. In these circumstances, the applicant could not able to make out a prima facie case for total waiver of pre-deposit. No financial hardship was pleaded by the applicant. Accordingly, it was directed to the applicant to deposit 50% of the service tax of Rs. 7.49 lakhs within a period of twelve weeks and report compliance on 9-1-2014. On deposit of the said amount, the balance amount of dues adjudged against the applicant would stand waived and its recovery stayed during pendency of the appeal. Failure to deposit the said amount would result in dismissal of the appeal without further notice.

Decision:- Stay partly granted.

Comment:- The substance of the case is that the services provided in relation to meter reading, preparation of monthly energy bill, delivery of the bills to customers, preparation and supply of consumer ledger etc. are to be treated as services provided on behalf of State electricity board and consequently, the said services are prima facie liable to service tax under the category of business auxiliary services.

Prepared By:- Sharad Bang

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PJ/CASE LAW/2015-16/2833

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