Case Law Details
M/s. Mail Related Services Vs Commissioner of Service Tax (CESTAT Chennai)
It is not disputed that the costs related to franking are paid directly to the Post Master General by the appellant’s clients or are otherwise paid by the appellant and subsequently, reimbursed by the said clients. Therefore, it cannot be alleged that the said charges are accruing to the appellants. Hence, in our view, they cannot be made part of the value of taxable service. Even in cases where the appellants pay the franking cost to the postal department on behalf of their clients, they get reimbursed for the same by the said clients. In the latter cases, the situation will be fully covered by the ratio laid down by the Hon’ble Apex Court in Union of India Vs. Intercontinental Consultants and Technocrats Pvt. Ltd., 2018 (10) G.S.T.L. 401 (S.C.). We are, therefore, of the firm view that the franking cost cannot be made part of the value of taxable service.
Coming to the controversy on rebate received from the postal department, it cannot be treated as a commission or an amount received for promoting the postal services. Such incentives are given by the postal authority to encourage use of franking machines, especially where the volumes are above a certain threshold level. We, therefore, do not find any merit in the adjudicating authority’s stand that these are required to be taxed under Business Auxiliary Services.
FULL TEXT OF THE CESTAT JUDGMENT
The appellants are engaged in providing mailing services using franking machines obtained on licence from the postal department. In this exercise, appellants collect the mail from their clients, frank them as per weight and then mail the documents/packets concerned. For this activity, appellants collected certain service charges from the clients. The appellants were discharging tax liability in respect of service charges received from their clients with effect from 16.06.2005, namely, from the date from which “Mailing List Compilation and Mailing Services” became taxable under the Finance Act, 1994.
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