The appellant provided services to Government departments like Income-tax Department, EPFO, DCA, etc. — The Department demanded service tax for services provided to DCA and EPFO under ‘Management Consultants Services’ — Held, services provided to DCA and EPFO were taxable under the category of ‘Information Technology Software service’ — As regards services of issuing PAN cards, it was held that they were services provided in relation to sovereign function of Incometax Department hence not liabl<

The appellant provided services to Government departments like Income-tax Department, EPFO, DCA, etc. — The Department demanded service tax for services provided to DCA and EPFO under ‘Management Consultants Services’ — Held, services provided to DCA and EPFO were taxable under the category of ‘Information Technology Software service’  — As regards services of issuing PAN cards, it was held that they were services provided in relation to sovereign function of Income-tax Department hence not liable as business auxiliary service.

The appellant rendered services to various Government departments, namely, Income-tax Department, Department of Company Affairs, Employees Provident Fund, etc. For Income-tax Department they were undertaking the service of issue of PAN cards and for this purpose they used to print, supply and distribute application forms to the applicant, receive application in the prescribed form on behalf of the Incometax Department, validate the applications with the checklist provided by the Department and in case of any discrepancies, the applications were returned to the applicants pointing out the deficiency and for re-submission with necessary correction/rectification. On receipt of PAN from the National Computer Center of the Income-tax Department, the appellant would print PAN cards and issue the same to the applicants. The above service was sought to be classified under the category of ‘Business Auxiliary Services’. The Department made demand for service tax for the period of July 2003 to September 2004 on amount received as service charges from various applicants of PAN card. Further, for rendering service to Employee Provident Fund Organisation (EPFO), demand was made under the category of ‘Management Consultants Services’. Similarly, for services rendered to the Department of Company Affairs (DCA) towards E-Governance Project, also the demand was made treating the service as management consultancy.

Held:

In respect of services rendered for issue of PAN cards on behalf of the Income-tax Department it was held that they were the services provided in relation to sovereign function of the Income-tax Department of levy and collection of income-tax and it was not in relation to any business and hence issue of PAN cards was not leviable to service tax under ‘Business Auxiliary Services’. The services rendered by the appellant to the DCA were to manage and monitor the modernisation and computerisation of various operations and the services provided to EPFO were in relation to acquisition and installation, commissioning and system integration of the IT services. These activities were classifiable under the category of ‘Information Technology Software Service’ and not under ‘Management Consultants Services’.