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Commr. of C. Ex., Salem V/S Swathi Institute of Computer Technology

    Final Order No. 43073/2017 in Appeal No. ST/474/2009-DB and Cross Objection No. ST/CO/100/2009

    Decided On, 07 December 2017

    At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Chennai

    By, THE HONORABLE JUSTICE: SULEKHA BEEVI C.S.
    By, MEMBER AND THE HONORABLE JUSTICE: MADHU MOHAN DAMODHAR
    By, MEMBER

    For Petitioner: B. Balamurugan, AC (A.R.)



Judgment Text


1. The above appeal is filed by Revenue against the order passed by Commissioner (Appeals) who set aside the demand of Service Tax, interest and penalties imposed. The respondents were appointed by Government of Tamil Nadu as one of the vendors for the work of production of Electors Photo Identity Cards (EPIC) in various districts of Tamil Nadu. The work of EPIC involves taking the photos of voters and putting photo prints in identity cards with the details of the voters name, address, age, etc. and laminating the cards. The work undertaken by the respondent appeared to be covered under the definition of "Photography Service" and the department issued show cause notice demanding payment of Service Tax, interest and also proposing to impose penalties. After due process of law, the adjudicating authority confirmed the demand of Rs. 27,59,586/- along with interest and imposed penalties under Sections 76, 77 and 78 of the Finance Act, 1994. Aggrieved, the respondents filed appeal before Commissioner (Appeals) who vide the order impugned herein held that the activities undertaken by the respondents would not fall under the category of photography service and set aside the demand. Hence, Revenue is in appeal before this forum.

2. On behalf of Revenue, Ld. AR Shri B. Balamurugan reiterated the grounds of appeal. He submitted that the respondents have rendered photography services as part of the agreement entered into by them with the District administrations. The respondents cannot be held to be discharging any sovereign function and therefore the respondent's contention that they are discharging sovereign function for the State cannot be accepted. The Commissioner (Appeals) has erred in holding that the issue of EPICs cannot be considered as photography services. As per Section 65(78) of Finance Act, 1994, photography service includes still photography, motion picture photography, laser photography, aerial photography or fluorescent photography. In the present case, the respondents issued EPICs and for such activity, they have undertaken to take the photographs as well as printing and laminating them before handing over to the voters. Therefore, the principal activity is photography service and therefore such services would be taxable under such category.

3. None appeared for the respondents, though notice was issued. The appeal is taken up for disposal after perusal of records and the cross-objections filed by the respondent as well as considering the submissions made by Ld. AR.

4. The respondents have filed cross-objections stating that they were engaged for production of EPICs for various Districts as per GO Ms. No. 126 [Public (Election) Department], dated 3-2-2006. The production of EPICs involve capturing of photographic images of identified electors, resizing of images, linking of images with the electoral rolls data base, printing of photo rolls as per Election Commission of India guidelines throughout the Districts of Tamil Nadu. That such production of EPICs would amount to production of goods and as per the Board's Circular No. 167/18/95-CX4, dated 14-8-1995, the Board has clarified that the photo identity cards and holograms merit classification under Chapter 4901.90 of the CETA, 1985. Since the respondents were engaged by the Government of Tamil Nadu, for production of EPICs and not merely taking photographs of the voters, the activity would not fall under photography service. The respondent was engaged only in production of EPICs. Reading of the whole contract makes it clear that the same was intended to ensure production of EPICs. The terms of the contract did not provide for rendering photography service. That one segment cannot be separated for levying Service Tax. The contract was for total activities done by the respondent and not merely for taking photograph of the voters. The production of EPIC involves videography of the person, computerized capture of the video graphed image, merging of the image with the data of the person already entered in the computer and the computerized printing out of the merged data and the image through a laser printer. This print out has to be verified, validated and pasted with the holograms of the State emblem and then cut, folded and laminated before issue to the person. The Commissioner (Appeals) has rightly analyzed the facts as well as law and observed that the activities undertaken by the respondent would not come under photography service. The activity of production of EPICs has been analysed by the Commissioner (Appeals) in para 5.3, which is reproduced as under:-

"Further it is submitted by the appellants that the vendor has to generate EPICs at the designated photographic locations. While generating EPICs, the images stored in the backup should be copied to IMGTEMP folder. The images in the IMGTEMP should be renamed to the part number and serial number of the elector. Each image is linked against each elector through part number and serial number of the elector. The vendor should first correct permissible mistakes in the elector's data with respect to the application given by the elector. Images of the elector should be collected and the unique EPIC number will be generated. In an A4 paper four EPICs will be printed. The printed EPIC for each elector should be cut using the cutter. The District Election Officer will supply the holograms and facsimile of ERO's signature that would be affixed by the representative of the ERO concerned. The vendor will laminate the EPICs and give them to the representat

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ive of ERO for distribution. It is clear that all these activities would show that they engaged only in production of EPICs, an excisable goods falling under Chapter Heading 4901.90 of the Schedule to the Central Excise Tariff Act, 1985." From the above discussions, we are of the view that the activity carried out by the respondent would not fall within the definition of photography service and the Commissioner (Appeals) has rightly set aside the demand. The impugned order calls for no interference. The appeal filed by Revenue is dismissed. The cross-objection filed by the respondent is disposed of accordingly.
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