2007 (3) TMI 94 - AT - Service Tax

Exemption Department contended that appellant is not entitle for refund on the ground that exemption from payment of service tax not available to them - Appeal is allowed by way of remand

Summary

Issues: Claim for refund of service tax paid on commission received from sales of mutual funds under Business Auxiliary Service; Interpretation of Notification 13/2003-S.T. regarding exemption for commission agents dealing with goods.

In this case, the Appellate Tribunal CESTAT, Mumbai heard an appeal against the Commissioner (Appeals) order upholding the adjudication order rejecting the claim for refund of service tax paid by the appellants, who provide Banking and financial services and Business Auxiliary Services. The dispute arose from the commission received from sales of mutual funds during a specific period. The appellants argued that they were entitled to the benefit of exemption under Notification 13/2003-S.T. as the definition of goods under the Finance Act includes a wide range of securities, such as Stocks and Shares, which encompass mutual funds. They contended that since mutual funds are securities as defined by the Securities and Exchange Board of India, they should be eligible for the exemption under the notification.

The Revenue, represented by the ld. SDR, relied on Circular No. 66/15/2003-S.T., which clarified that the commission received by distributors on the distribution of mutual funds does not pertain to the sale or purchase of goods. The circular stated that the exemption under Notification 13/2003-S.T. is applicable only to commission agents dealing with goods. However, the appellants argued that mutual funds should be considered as goods, and the authorities had not provided any reasoning as to why mutual funds could not be classified as goods under the notification.

Upon review, the Tribunal found that the authorities had not addressed the specific plea raised by the appellants regarding the classification of mutual funds as goods under Notification 13/2003-S.T. Therefore, the Tribunal set aside the impugned order and remanded the case to the Jurisdictional Dy. Commissioner of Service Tax for a fresh decision on this specific issue. The Dy. Commissioner was instructed to provide a fresh order after giving the appellants a reasonable opportunity to present their case.

Ultimately, the appeal was allowed by way of remand, emphasizing the need for a thorough examination of whether mutual funds could be considered as goods under the relevant notification, and directing a fresh decision by the tax authorities.