If a service is classifiable under “Business support service” from a given date and the said service is not carved out of any of the existing services, it cannot be construed that service was taxable prior to that date

Baba Trading co vs. CCE (2014-TIOL-1470-CESTAT-MUM)

Facts of case:

Baba Trading Company was given the right to book, deliver, transshipment, handling, loading, unloading etc. and to carry out the business of courier by the ordinary buses of MSRTC. The said agreement by no stretch of imagination can be considered as a “franchise services” because

MSRTC is not a “courier service” provider but merely transporter of goods. Further, the sub-licensee M/s ShriSai Transport and Courier Pvt. Ltd. cannot be considered as franchisee of Baba Trading Company as he is not representing M/s Baba Trading Company but MSRTC who is actually undertaking the transportation of the parcels/goods. On the said services, for the consideration received, the sub-licensee has discharged service tax liability under the category of “courier services”. Further as per the clarification issued by the Commissioner of Service Tax, Mumbai, the service comes within the category of “support service for business or commerce” and as per the clarification issued by the CBE & C, classification under business support service will be effective from 01/05/2011 and not prior to that. Thus, as per the department itself, prior to 01/05/2011, there is no liability to pay service tax on the said activity.
Held:
If a service is classifiable under business support service from a given date and the said service is not carved out of any of the existing services, it cannot be construed that service was taxable prior to that date. Therefore, the question of levying any service tax on the activity under the category of “franchise service” would not arise at all, inasmuch as the “business support service” has not been carved out of “franchise service.

--