2018 (11) TMI 173 – CESTAT HYDERABAD – 2018 (19) G. S. T. L. 645 (Tri. – Hyd.) – Levy of service tax – Collection of taxes for the Central Government and the Government of State and the commission received for such collection from those Governments – Held that:- The services are neither sale or marketing of goods nor promoting or marketing of services or any customer care services. In fact, collection of tax is neither a sale of good nor rendering of service. It is a compulsory payment which is collected by law from everyone by the State and the tax payer is not the customer or the client of the Government. It is in this compulsory collection of money in the form of tax, the appellant is assisting the Government of India and the State Government and is getting paid for the same – by no stretch of imagination can collection of taxes be called a business auxiliary service within the definition as per Sec. 65 (9) – demand set aside.
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Levy of service tax – Sale of Government of India
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ial services” – the demand made on sale of credit cards under the head of ‘business auxiliary services’ does not sustain.
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Whether the appellant has been issued show cause notice without jurisdiction as the head office of the appellant banking company had not rendered the services but their branches did? – Held that:- The assessee opted for centralized registration for some other services and has been discharging service tax accordingly. As far as the alleged four taxable services are considered, they have not paid any service tax. Having opted for centralized registration the appellant cannot now argue that their head office has no role in providing the services and hence cannot be issued a show cause notice. It is not the case of the appellant that their branch offices are separately registered with the department for the alleged services rendered – there is no force in the arguments of the appellant that the show cause notice was issued without jurisdiction.
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Extended peri
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respect of merchant banking services. The Director General of Central Excise Intelligence conducted investigation and found that the appellant has been rendering services and receiving amounts in respect of the following: (i) Collection of taxes on behalf of Central Government & Government of State. (ii) Sale of Government of India Bonds. (iii) Sale of mutual fund units of SBI. (iv) Sale of credit cards of SBI. 2. After collecting necessary details from the appellant and investigating the matter a show cause notice dated 03.03.2008 was issued to the appellant covering the period 01.07.2003 to 09.09.2004 demanding service tax under the head business auxiliary services in respect of the above four activities. It was also proposed to recover interest under Sec. 75 and impose penalties under Sec. 76, 77 & 78 of the Finance Act, 1994. The appellant contested the show cause notice before the original authority both on merits as well as on limitation. Appellant further argued that th
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intention to evade tax. (c) The show cause notice was issued without jurisdiction to the head office of the appellant bank. (d) Learned Commissioner erred in confirming the demand on the appellant bank without jurisdiction. (e) The sale of mutual fund units and Government of India Bonds during the relevant period was exempt from tax under Notification No. 13/2003 dated 20.06.2003. These mutual funds and Government of India Bonds are goods and the commission received on sale of goods was exempted vide the aforesaid notification. (f) Services rendered in relation to sale of credit cards are taxable only w.e.f. 01.05.2006. (g) Learned Commissioner erred in calculating service tax on total amount received which must be taken as inclusive of service tax amount. The penalties have been wrongly imposed by the learned Commissioner. 4. Learned counsel for the appellant submits that they are contesting the demand on merits, on limitation as well as on the jurisdiction. The sale of mutual funds a
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re as follows: 1) Whether service tax is chargeable during the relevant period on a. Collection of taxes for the Central Government and the Government of State and the commission received for such collection from those Governments. b. Sale of Government of India Bonds and commission received from RBI for such sale. c. Sale of credit cards of SBI (Issuing Bank) and the commission received from SBI for such sale. d. Sale of mutual funds of SBI and the commission received for such sale from SBI. 2) Whether extended period of limitation is invokable in this regard. 3) Whether the appellant has been issued show cause notice without jurisdiction as the head office of the appellant banking company had not rendered the services but their branches did. 4) Whether interest is recoverable and penalty is imposable under Sec. 76, 77 & 78 of the Finance Act, 1994. 7. Coming to the question of jurisdiction in issuing the show cause notice, we find that the assessee opted for centralized registrat
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ved is July 2003 to 09.07.2004. Identical issue came up before the Tribunal in the case of P.N. Vijay Financial Services (P) Ltd. Wherein the Bench held that sale and purchase of mutual funds is covered under notification No. 13/2003-ST and hence any commission received for such activity, no tax is payable. The same view was expressed by the Tribunal in the case of Geojit Financial Services Ltd. Therefore, we find no reason to deviate from such a view already taken. 9. As regards the commission received on collection of telephone bills, we find that the period involved is July 2003 to 09.09.2004. Hon ble Supreme Court in the case of Federal Bank Limited has categorically held that services provided by banks for collection of telephone bills, insurance premium on behalf of the client companies have to be considered as cash management service and cannot be considered under the category of business auxiliary services. On the face of such a categorical law being pronounced by Hon ble Apex
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lready taken. 8. In view of the above, we find no reason to take a different view in this case and we hold that the service of sale of Government of India bonds is not a service and there is no tax liability. As far as the sale of mutual funds is concerned, same has been covered by exemption notification 13/2003-ST as the commission received on sale of goods was exempted. The term good includes mutual funds as the same are movable property. As far as the collection of taxes on behalf of the Central Government and State Government is concerned, it is the argument of the revenue that these amount to business auxiliary services in terms of Sec. 65 (9) (iv). This clause defines business auxiliary services as any incidental or auxiliary support service such as billing, issue or collection or recovery of cheques, accounts and remittances, evaluation of prospective customer and public relation services and includes services as a commission agent but does not include technology service . In or
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y collection of money in the form of tax, the appellant is assisting the Government of India and the State Government and is getting paid for the same. Therefore, we are of the considered view that by no stretch of imagination can collection of taxes be called a business auxiliary service within the definition as per Sec. 65 (9). As far as the sale of credit cards is concerned, credit card services were part of the banking and other financial services w.e.f. 14.05.2003. But w.e.f. 01.05.2006 separate entry has been made for credit card services comprehensively covering credit card, debit card, charge card or other payment card services . This service included any service provided by any person to an issuing bank in relation to such card business including receipt or process of an application, transfer of embossing data to issuing bank s personalisation agency, ATM PIN generation, renewal or replacement of card, change of address, enhancement of credit limit, payment updation and statem
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