2013-TIOL-1838-CESTAT-MUM Sodexho Pass Services India Pvt. Ltd. vs. Commissioner of Service Tax, Mumbai

Facts:
The Appellant is in the business of issuing meal/gift coupon vouchers after entering into an agreement with affiliates such as restaurants, eating places, other establishments etc. and issue such coupons to the customers, generally in corporates who in turn would distribute among its employees as fringe benefit. The Appellant received service charges from its affiliates as well as from customers which the department contended to levy tax on and thus issued a show-cause notice on 28-04-2006 which the Commissioner partly confirmed by dropping the demands on amount received from customers. The department and the Appellant both were in appeal against the said order of the said Commissioner.

The department held a view that the assessee promoted the business of the affiliates inasmuch a user/employee had to purchase goods and services from one of the affiliates and cannot use these vouchers in any other establishments or for any other purposes and thus taxable under “Business Auxiliary Services”. The assessee contended that their services were similar to debit/credit cards and therefore, such transactions were covered under “Business Support Service” and thus not-taxable prior to 01-05-2006. Further, they also contended that providing a list of affiliates would not amount to promotion or marketing of affiliates as it was merely a facilitating mechanism.

Held:
Affirming the commissioner’s view and observing the definition of “Business Auxiliary Services” effective from 10-09-2004, the Hon. Tribunal also upholding penalty held that the service charges received from affiliates were taxable and rejected the contentions of the assessee that the same were similar to credit/debit cards.