ELECTRICITY TRANSMISSION AS SUPPORT SERVICES FOR BUSINESS OR COMMERCE
Service tax was imposed on support services for business or commerce
by the Finance Act, 2006 with effect from 1st May, 2006 (Notification
No. 15/2006-ST dated 25.04.2006 refers). The gross amount charged by
service provider to a person in relation to such taxable services is
chargeable to service tax.
Meaning of Support Services of Business or Commerce (Section 65(104c)
Section 65(104c) (as inserted by Finance Act, 2006) defines 'support
services of business or commerce' as under -
"support services of business or commerce" means services provided in
relation to business or commerce and includes evaluation of
prospective customers, telemarketing, processing of purchase orders
and fulfilment services, information and tracking of delivery
schedules, managing distribution and logistics, customer relationship
management services, accounting and processing of transactions,
operational assistance for marketing, formulation of customer service
and pricing policies, infrastructural support services and other
transaction processing.
Explanation.— For the purposes of this clause, the expression
"infrastructural support services" includes providing office along
with office utilities, lounge, reception with competent personnel to
handle messages, secretarial services, internet and telecom
facilities, pantry and security;
Support services of business or commerce means services provided in
relation to business or commerce and includes evaluation of
prospective customers, telemarketing, processing of purchase orders
and fulfilment services, information and tracking of delivery
schedules, managing distribution and logistics, customer relationship
management services, accounting and processing of transactions,
operational assistance for marketing, formulation of customer service
and pricing policies, infrastructural support services and other
transaction processing.
Business support services are different from business auxiliary
services as the latter are provided on behalf of a person. Support
services are provided to the service receiver.
The aforesaid definition is an inclusive definition and has two parts.
First, services in relation to business or commerce, and two, it
includes host of services i.e., evaluation of prospective customers,
telemarketing etc. the various services which are included are as
follows -
(a) evaluation of prospective customers
(b) telemarketing
(c) processing of purchase orders and fulfilment services
(d) information and tracking of delivery schedules
(e) managing distribution and logistics
(f) customer relationship management services
(g) accounting and processing of various transactions
(h) operational assistance for marketing
(i) formulation of customer service and pricing policies
(j) infrastructure support services and other transaction
processing services.
The first part of the definition itself is very wide which otherwise
covers all that is mentioned in the inclusive part. CBEC has not
clarified on the scope of business and commerce which implies that all
services which support business or commerce shall get covered. So far
as second inclusive part is concerned, doctrine of ejusdis generis
should apply so much so that the services should be same as they flow
from the other services mentioned in the definition.
In M.P. Power Transmission Co. Ltd. v CCE [2008 -TMI - 4449 - CESTAT,
Delhi], assessee was a state government corporation engaged in
arranging of transmission of electricity with minimum loss and at
appropriate voltage to end consumer from transom and Discoms. The
Tribunal held that assessee engaged in arranging transmission of
electricity with minimum loss and at appropriate voltage to end
consumer from Transco and Discoms, is providing support services
liable to service tax hence ordered to pre-deposit a sum of Rs 5
crores as against demand of Rs 67.28 crores.
Support services of business or commerce means services provided in
relation to business or commerce and includes evaluation of
prospective customers, telemarketing, processing of purchase orders
and fulfillment services, information and tracking of delivery
schedules, managing distribution and logistics, customer relationship
management services, accounting and processing of transactions,
operational assistance for marketing, formulation of customer service
and pricing policies, infrastructural support services and other
transaction processing.
The first part of the definition itself is very wide which otherwise
covers all that is mentioned in the inclusive part. CBEC has not
clarified on the scope of business and commerce which implies that all
services which support business or commerce shall get covered. So far
as second inclusive part is concerned, doctrine of ejusdis generis
should apply so much so that the services should be same as they flow
from the other services mentioned in the definition.
Section 65(105)(zzzq) defines taxable service to mean any services
provided or to be provided to any person, by any other person, in
relation to support services of business or commerce, in any manner.
Taxable services would cover both services provided and to be provided
and must be those services which are in relation to support services
of business or commerce. Such services could be provided in any
manner. According to the definition, taxable services generally cover
all outsourced activities or services in relation to business or
commerce (other than those covered under section 65(19) as business
auxiliary services) and infrastructure support services like those in
relation to business centre etc.
There may be some overlapping of services between business auxiliary
services and support services of business or commerce as some of the
services were hitherto being taxed as business auxiliary services such
as telemarketing, back office transaction processing, customer
evaluation etc. While business auxiliary service specifically covers
some services, services under this category are much wide as it would
cover any service which supports business or commerce. This implies
that services availed for personal or domestic purpose will not be
covered.
Where as there was no dispute for providing there services, so as to
ensure that transmission losses were minimized and power of suitable
voltage reach the distribution point, owned by discoms and then
ultimately sold to customers, it is also a fact that unlike other
goods, electricity can not be stored and is to be instantly
transmitted to various points for distribution.
So far as scope of taxable service and definition of support services
is concerned, the expressions ;in relation to' and 'in any manner' are
very important. The words, 'in any manner' signify the legislative
intent to include services provided by service provider in any manner.
'In relation to' widens the scope and dimension of service. The
Tribunal relied upon apex court's judgment on 'in relation to' in
Doypack Systems Pvt Ltd v Union of India (1988) 36 ELT 201 (SC).
The service provided had a close nexus with Transco and Discoms and
without the support of subject service provided by assesse, the sale
of electricity could not be completed. In conclusion, it was observed
that it is irresistible that the assessee was providing support
services and was thus liable to pay service tax.
by the Finance Act, 2006 with effect from 1st May, 2006 (Notification
No. 15/2006-ST dated 25.04.2006 refers). The gross amount charged by
service provider to a person in relation to such taxable services is
chargeable to service tax.
Meaning of Support Services of Business or Commerce (Section 65(104c)
Section 65(104c) (as inserted by Finance Act, 2006) defines 'support
services of business or commerce' as under -
"support services of business or commerce" means services provided in
relation to business or commerce and includes evaluation of
prospective customers, telemarketing, processing of purchase orders
and fulfilment services, information and tracking of delivery
schedules, managing distribution and logistics, customer relationship
management services, accounting and processing of transactions,
operational assistance for marketing, formulation of customer service
and pricing policies, infrastructural support services and other
transaction processing.
Explanation.— For the purposes of this clause, the expression
"infrastructural support services" includes providing office along
with office utilities, lounge, reception with competent personnel to
handle messages, secretarial services, internet and telecom
facilities, pantry and security;
Support services of business or commerce means services provided in
relation to business or commerce and includes evaluation of
prospective customers, telemarketing, processing of purchase orders
and fulfilment services, information and tracking of delivery
schedules, managing distribution and logistics, customer relationship
management services, accounting and processing of transactions,
operational assistance for marketing, formulation of customer service
and pricing policies, infrastructural support services and other
transaction processing.
Business support services are different from business auxiliary
services as the latter are provided on behalf of a person. Support
services are provided to the service receiver.
The aforesaid definition is an inclusive definition and has two parts.
First, services in relation to business or commerce, and two, it
includes host of services i.e., evaluation of prospective customers,
telemarketing etc. the various services which are included are as
follows -
(a) evaluation of prospective customers
(b) telemarketing
(c) processing of purchase orders and fulfilment services
(d) information and tracking of delivery schedules
(e) managing distribution and logistics
(f) customer relationship management services
(g) accounting and processing of various transactions
(h) operational assistance for marketing
(i) formulation of customer service and pricing policies
(j) infrastructure support services and other transaction
processing services.
The first part of the definition itself is very wide which otherwise
covers all that is mentioned in the inclusive part. CBEC has not
clarified on the scope of business and commerce which implies that all
services which support business or commerce shall get covered. So far
as second inclusive part is concerned, doctrine of ejusdis generis
should apply so much so that the services should be same as they flow
from the other services mentioned in the definition.
In M.P. Power Transmission Co. Ltd. v CCE [2008 -TMI - 4449 - CESTAT,
Delhi], assessee was a state government corporation engaged in
arranging of transmission of electricity with minimum loss and at
appropriate voltage to end consumer from transom and Discoms. The
Tribunal held that assessee engaged in arranging transmission of
electricity with minimum loss and at appropriate voltage to end
consumer from Transco and Discoms, is providing support services
liable to service tax hence ordered to pre-deposit a sum of Rs 5
crores as against demand of Rs 67.28 crores.
Support services of business or commerce means services provided in
relation to business or commerce and includes evaluation of
prospective customers, telemarketing, processing of purchase orders
and fulfillment services, information and tracking of delivery
schedules, managing distribution and logistics, customer relationship
management services, accounting and processing of transactions,
operational assistance for marketing, formulation of customer service
and pricing policies, infrastructural support services and other
transaction processing.
The first part of the definition itself is very wide which otherwise
covers all that is mentioned in the inclusive part. CBEC has not
clarified on the scope of business and commerce which implies that all
services which support business or commerce shall get covered. So far
as second inclusive part is concerned, doctrine of ejusdis generis
should apply so much so that the services should be same as they flow
from the other services mentioned in the definition.
Section 65(105)(zzzq) defines taxable service to mean any services
provided or to be provided to any person, by any other person, in
relation to support services of business or commerce, in any manner.
Taxable services would cover both services provided and to be provided
and must be those services which are in relation to support services
of business or commerce. Such services could be provided in any
manner. According to the definition, taxable services generally cover
all outsourced activities or services in relation to business or
commerce (other than those covered under section 65(19) as business
auxiliary services) and infrastructure support services like those in
relation to business centre etc.
There may be some overlapping of services between business auxiliary
services and support services of business or commerce as some of the
services were hitherto being taxed as business auxiliary services such
as telemarketing, back office transaction processing, customer
evaluation etc. While business auxiliary service specifically covers
some services, services under this category are much wide as it would
cover any service which supports business or commerce. This implies
that services availed for personal or domestic purpose will not be
covered.
Where as there was no dispute for providing there services, so as to
ensure that transmission losses were minimized and power of suitable
voltage reach the distribution point, owned by discoms and then
ultimately sold to customers, it is also a fact that unlike other
goods, electricity can not be stored and is to be instantly
transmitted to various points for distribution.
So far as scope of taxable service and definition of support services
is concerned, the expressions ;in relation to' and 'in any manner' are
very important. The words, 'in any manner' signify the legislative
intent to include services provided by service provider in any manner.
'In relation to' widens the scope and dimension of service. The
Tribunal relied upon apex court's judgment on 'in relation to' in
Doypack Systems Pvt Ltd v Union of India (1988) 36 ELT 201 (SC).
The service provided had a close nexus with Transco and Discoms and
without the support of subject service provided by assesse, the sale
of electricity could not be completed. In conclusion, it was observed
that it is irresistible that the assessee was providing support
services and was thus liable to pay service tax.
0 comments:
Post a Comment