BUSINESS SUPPORT SERVICE

BUSINESS SUPPORT SERVICE

-CA SUDHIR HALAKHANDI

(The above article was written when service tax was introduced on Business support service)
Business support services have been introduced under the net of service tax by the finance Act-2006 and this is applicable from 1st. May 2006 and it is a very interest and wide enough service, which is introduced under the net of service tax. Support services encompass a diverse array of services that aid businesses in their operations. These services can include legal and accounting assistance, marketing and advertising support, IT and technology services, human resources and staffing assistance, and various other specialized consulting and advisory services. They are essential for businesses to thrive and efficiently manage their day-to-day activities and growth strategies. Let us try to understand this particular service: -

1.WHAT IS BUSINESS SUPPORT SERVICE

Support service of business or commerce: -Section 65(104c) “support services of business or commerce” means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing policies, infrastructural support services and other transaction processing.
Explanation. —For the purposes of this clause, the expression “infrastructural support services” includes providing office along with office utilities, lounge, and reception with competent personnel to handle messages, secretarial services, Internet and telecom facilities, pantry and security.

ILLUSTRATIVE LIST OF BUSINESS SUPPORT SERVICES

Let us first analyse the definition of the Business support service of business and commerce and it means any service provided or to be provided in Relation to business and commerce and it is very wide definition and to illustrate the scope of this service following type of services connected with the business and commerce have been given:-
 
1.      Evaluation of the Prospective Customers
2.      Telemarketing
3.      Process of purchase orders and their fulfillment services
4.      Customer relationship Management service
5.      Accounting and processing of transactions
6.      Information and tracking of deliveries Schedule
7.      Managing distribution and logistics
8.      Operational assistance for marketing
9.      Formulation of customer service and pricing policies
10.    Infrastructural support services and other transaction processing

Here one should note that all the Business and commerce support services are taxable without any exception and the list given above which has been compiled from the Definition of the Business and Commerce support service as given in section 65(105) (104C) is only illustrative.

EXPLANATION TO INFRASTRUCTURE SUPPORT SERVICE

One explanation is added to this particular section to explain the scope of Infrastructure support service and it in this explanation it is provided that the Infrastructure support service will include the following also: -

Providing office along with: -
1.      Office utilities
2.      Lounge
3.      Reception
4.      Competent personnel to handle message
5.      Secretarial services
6.      Internet and telecom facilities
7.      Pantry
8.      Security.

MERE RENTING THE OFFICE IS NOT TAXABLE

Here one should note merely renting an office place is not “Business and Commerce Support service” the taxable service is only arises when the service provider provides above mentioned office facilities.

2.WHAT IS TAXABLE SERVICE

Taxable service: - Section 65(105) (zzzq) Taxable service means any service provided or to be provided to any person, by any other person, in relation to support services of business or commerce, in any manner.

Here taxable service means: -
Any service provided or to be provided;
To any person;
By any other person;
In relation to support service of Business or Commerce;
In any manner.

At present in case of Business auxiliary service the service is taxable only when it is provided by the “Commercial concern” and now the word “Commercial concern” is also proposed to be replaced by “Any person” to widen the scope of the service. In case of newly any person provides introduced service “Business and Commerce support” service at the initial state it is provided that the service will be taxable in case of it is provided by “any other person”. Hence the scope of the Business auxiliary services has been widened and the Business support service is being introduced with already widened scope from the initial stage.

3.PERSON LIABLE TO PAY SERVICE TAX

Normally the service tax (i.e., GST) is payable by the service provider but in certain exceptions this tax is payable by persons other than service provider i.e. service receiver etc.

4.GOVERNMENT CLARIFICATION

BUSINESS SUPPORT SERVICES: Business entities outsource a number of services for use in business or commerce. These services include transaction processing, routine administration or accountancy, customer relationship management and tele marketing. There are also business entities, which provide infrastructural support such as providing instant offices along with secretarial assistance known as “Business Centre Services”. It is proposed to tax all such outsourced services. If these services are provided on behalf of a person, they are already taxed under Business Auxiliary Service. Definition of support services of business or commerce gives indicative list of outsourced services.