2018 (11) TMI 165 – CESTAT HYDERABAD – TMI – Business Auxiliary services – commission received from the RBI by the banks – appellant carried out various Government transactions on behalf of the Central and the State Governments and have received commission – taxability – N/N. 22/2006-ST dated 31.05.2006 – Held that:- The Notification exempts taxable services provided or to be provided by any person to the Reserve Bank of India when the service tax for the service is liable to be paid by the Reserve Bank of India under Sub-Section (2) of Section 68 of the Finance Act, 1994 read with Rule 2 of the Service Tax Rules, 1994 – It further exempts taxable services provided or to be provided to any person by the Reserve Bank of India.
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Demand set aside – appeal allowed – decided in favor of appellant. – Appeal No. ST/1349/2010 – A/31191/2018 – Dated:- 20-8-2018 – Mr. M.V. Ravindran, Member (Judicial) And Mr. P. Venkata Subba Rao, Member (Technical) Shri S. Ananthan, CA (Representative) f
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78. He refrained from imposing any penalty under Sec.78. Aggrieved, by this order the appellant filed this appeal on the following grounds: (1) The commission which they have received from Reserve Bank is for maintenance of pension accounts of Government employees which is a sovereign function carried out on behalf of the Government and hence as such not liable to tax. (2) That the Notification No. 22/2006-ST dated 31.05.2006 is applicable to them as they are acting as an agent of Reserve Bank of India and were receiving commission from them. The learned Commissioner erred in holding that appellant had wilfully suppressed facts with an intention to evade tax without bringing out any tangible evidence on record. (3) The learned Commissioner has wrongly levied penalties under Sec.77 & 78 of the Finance Act, 1994 in contravention to Sec.80 thereof. 2. Learned counsel for the appellant vehemently argued as above. He further contended that earlier a show cause notice was issued for the
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regard to public interest, convenience of banking and other factors, can appoint a national bank or the State Bank to transact business as its agent at any place in India. Drawing power from this Section, RBI appoints various national banks/public sector banks for collection of various taxes and making payment of pension etc. This would mean that various national banks are agents of the RBI. 7.5 The Central Govt. of India by Notification No. 22/2006-ST has given exemption from the payment of service tax of any taxable services provided to or by RBI either in India or under Reverse Charge Mechanism. In our view as the respondent assessee is an agent of RBI, exemption granted by notification No. 22/2006-ST, needs to be extended to respondent. In our view the claim of the respondent from exemption of the service tax on the commission received for undertaking the activity of receiving various taxes on behalf of the Govt. of India, seems to be justified inasmuch as that the provisions of Se
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from the service tax liability in respect of various services, its agent for doing such services also needs to be extended the same benefit. 7.7 We may also look at the present controversy from another angle. State Bank of Patiala has been appointed by RBI as its agent under Section 45 of the RBI Act. RBI itself has been entrusted by the Central Government to transact Government business. Hence once State Bank of Patiala has been appointed as agent of RBI, it is transacting Government business which is in the nature of a sovereign function performed on behalf of the Government and hence not liable to Service Tax. 7.8 In our considered view the judgement of the Tribunal in the case of Canara Bank 2012-TIOL-790-CESTAT-Ahm has correctly interpreted notification no. 22/2006-ST and is correct exposition of the law. In our view the said judgement does not require any reconsideration. 7.9 As regards the case law cited by the learned D.R. and reliance placed in the case of Malwa Industries Lt
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oner (A.R.) in the case of Uttam Industries (supra) may also not carry the case of revenue any further as facts were totally different, than the facts in the case in hand. 8. In view of the foregoing discussion, we answer the reference in favour of the respondent and hold that the law as laid down by the Tribunal in the case of Canara Bank (supra) is correct exposition of law. Present appeal has no merit and dismissed. 3. He also relied on the case of Syndicate Bank [2018 (8) TMI 699] and State Bank of Hyderabad [2017 (2) TMI 1347]. He therefore argued that the demand may be set aside along with interest and penalty. 4. Learned departmental representative reiterates the Order-in-Original. 5. We have considered the arguments on both sides. Notification No. 22/2006-ST dated 31.05.2006 clearly exempts taxable services provided or to be provided by any person to the Reserve Bank of India when the service tax for the service is liable to be paid by the Reserve Bank of India under Sub-Sec. (
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