State Bank of Hyderabad Versus CCT, Hyderabad – GST
Service Tax
2018 (11) TMI 165 – CESTAT HYDERABAD – 2019 (29) G. S. T. L. 330 (Tri. – Hyd.)
CESTAT HYDERABAD – AT
Dated:- 20-8-2018
Appeal No. ST/1349/2010 – A/31191/2018
Service Tax
Mr. M.V. Ravindran, Member (Judicial) And Mr. P. Venkata Subba Rao, Member (Technical)
Shri S. Ananthan, CA (Representative) for the Appellant.
Shri B. Guna Ranjan, Superintendent/AR for the Respondent.
ORDER
Per: P.V. Subba Rao.
1. The appellant herein is a nationalized bank with Head Quarters at Hyderabad. They carried out various Government transactions on behalf of the Central and the State Governments and have received commission from the RBI for these services known as agency services. A show cause notice was issued to the appellant demanding service tax on these services and they paid the same under protest. A show cause notice was issued demanding the service tax on these services and proposing to appropriate the amoun
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lfully 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 same transactions demanding duty under 'Business Auxiliary Services' and the demand was dropped. Thereafter this show cause notice was issued demanding duty under 'Banking and other financial services'. He, therefore, contends that the department was fully aware of the nature of their activities and had themselves examined whether service tax was payable under Business Auxiliary services and found it was not. He further submits that the issue of taxability of commission received from the RBI by the banks has been finally settled by the Tribunal in the case of Canara Bank [2012 (6) TMI 274 (CESTAT-Ahmedabad)
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n 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 Section 45 of RBI Act categorically mandated for appointing national bank or a State Bank by the RBI for specified purposes as directed by Government; and the said Section also mandates that such Banks will be agents of RBI. As whether an agent will be eligible for exemption or otherwise is being contested in the appeal, in our view the question does not arise as Chapter V of the Finance Act, 1994, in Section 65 (7), the term assessee has been defined which is reproduced:-
Section 65 (7) – Assessee means a person liable to pay the service tax and includes his agent
7.6 It can be seen from the above
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able 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 Ltd (supra) we find that in that case, the Apex Court was considering the situation of exemption by a notification from a countervailing duty. Learned Commissioner (A.R.) was relying upon this decision to canvass his point that exemption notification should be read literally and should be construed liberally once it is concluded that benefits the notification is applicable. We do not find any merits in the said submission made by the learned D.R. inasmuch as that the definition of assessee in the Finance Act in Section 65(7) clearly states that assessee means a person liable to pay service ta
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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. (2) of Sec.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. The aforesaid order of the larger bench of the CESTAT clearly held that the banks receiving commission for the services rendered as an agent to the RBI are not liable to the service tax. This decision has been followed in the other case laws cited above. We find no reason to deviate from this settled legal position. We respectfully follow the same and consequentially find the appeal is liable
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