2010 (12) TMI 321 - AT - Service Tax

Collection of octroi - Waiver of pre-deposit - It is pertinent to note that an exclusion clause which was present in the text of the definition of Banking and other Financial Service under Section 65(12)was omitted w.e.f. 1-6-2007 - Banking and Other Financial Services - clause read but does not include cash management - The Hon ble High Court clarified that in the absence of any inclusive definition available in the statute it could not be said that the petitioners would fall within the mischief of the provision - It would therefore follow that the absence of exclusion was not reckoned as inclusion - waiver from pre deposit allowed.

Summary

Issues:
- Waiver of pre-deposit and stay of recovery sought by the appellant regarding service tax and penalty imposed by the Commissioner.
- Interpretation of the definition of 'Banking and Other Financial Services' under Section 65(12) of the Finance Act, 1994 in relation to octroi collection activity.
- Applicability of Notification No. 13/2004-Service Tax dated 10-9-2004 for exemption from service tax on duties or taxes collection.
- Analysis of the exclusion clause omission in the definition of 'Banking and other Financial Service' post 1-6-2007 and its impact on cash management inclusion.

Detailed Analysis:

1. The appellant sought waiver of pre-deposit and stay of recovery for service tax and penalty imposed by the Commissioner regarding octroi collection activity under a contract with a Municipal Corporation. The contract required the appellant to collect octroi and remit it to the Corporation, with a provision for retaining excess collections as remuneration. The demand under challenge was the levy of service tax on this amount.

2. The appellant's counsel argued that the activity of octroi collection did not fall under the definition of 'Banking and Other Financial Services' as per Section 65(12) of the Finance Act, 1994. Referring to a Board's Letter and judicial precedents, the counsel contended that the service tax liability was not applicable to the appellant's activity. Additionally, reliance was placed on Notification No. 13/2004-Service Tax for potential exemption if service tax liability was established.

3. The JCDR relied on the Notification to argue that the collection of octroi by the appellant should be considered a part of the service defined under Section 65(12) of the Finance Act, 1994. The JCDR highlighted the omission of an exclusion clause post 1-6-2007, suggesting that cash management was now included in the definition. The JCDR contested the appellant's reliance on the Board's Letter, stating that it did not provide a complete picture of the service definition.

4. The Tribunal considered the submissions and noted the exclusion clause's omission from the definition of 'Banking and Other Financial Services' post 1-6-2007. Referring to a relevant judgment, the Tribunal observed that the absence of an exclusion clause did not automatically imply inclusion. The Tribunal found merit in the appellant's argument and granted waiver of pre-deposit for the dues adjudged against them, indicating a favorable stance towards the appellant's case.

This detailed analysis of the judgment highlights the key issues raised, arguments presented by both parties, and the Tribunal's reasoning leading to the decision on the waiver of pre-deposit and stay of recovery in the context of service tax on octroi collection activity.