2012 (3) TMI 283 - AT - Service Tax

Whether a co-operative society can be held to be liable for service tax in respect of providing banking and other financial services as covered by the expression or any other body corporate, or any other person used in sub-section 65 (105) (zm) and sub-section 65 (12) - Appellants rely on the section 2 (7) of the Companies Act 1956 that body corporate or corporation includes a company incorporated outside India but does not include a co-operative society registered under any law relating to co-operative societies - assessee contented the co -operative societies are already excluded from the expression body corporate so it cannot be brought in by another expression which is not specific to include co-operative society - The argument of the Ld AR for revenue is that a co-operative society will be covered by the expression any other person , because such societies also are doing banking business like any other bank - Held that - since the Co-operative societies are managed by simplified controls through different enactments does not mean that for taxing the services such societies would be on a different footing as compared to services provided by a company - Since no specific exclusion is made in Finance Act, 1994,bank run by a co-operative society will come within the scope of entry 65 (105) (zm) and 65 (12) during the relevant time- since adjudication order has imposed both penalty under section 76 and section 78 the penalty under section 76 was uphold and set side penalty under section 78 - Appeals of assess were rejected on the issue of liability for tax and held the society to pay tax.

Issues:
1. Taxability of services rendered by a cooperative society under "Banking and Other Financial Services" as per Finance Act, 1994.
2. Interpretation of the expressions "body corporate" and "any other person" in relation to tax liability.
3. Application of the rule of ejusdem generis in determining the scope of the expressions used in the Finance Act, 1994.
4. Consideration of Circular No. 83/2006-ST issued by CBEC regarding the classification of services provided by different entities.
5. Imposition of penalties under sections 76 and 78 of the Finance Act, 1994.

Detailed Analysis:
1. The judgment involves three appeals by a cooperative society providing banking services, questioning the taxability of their services under "Banking and Other Financial Services" as defined in the Finance Act, 1994. The dispute revolves around whether a cooperative society can be held liable for service tax under the relevant provisions.
2. The key issue is the interpretation of the expressions "body corporate" and "any other person" in sections 65(105)(zm) and 65(12) of the Finance Act, 1994. The argument revolves around whether a cooperative society falls within the scope of these expressions for tax liability.
3. The rule of ejusdem generis is applied to determine if a cooperative society can be considered "any other person" as per the Act. The court analyzes the nature of cooperative societies compared to other entities specified in the Act to ascertain their inclusion under the tax provisions.
4. The judgment considers Circular No. 83/2006-ST issued by CBEC, which clarifies the classification of services provided by different entities. The court distinguishes the services of a post office from those of a cooperative society to establish the tax liability of the latter.
5. Regarding penalties, the court upholds the imposition of penalty under section 76 for the cooperative society's cessation of paying service tax based on a new interpretation. However, it sets aside the penalty under section 78, citing a High Court ruling that simultaneous penalties under sections 76 and 78 are not warranted.

This comprehensive analysis covers the legal nuances and interpretations made in the judgment, addressing each issue in detail while preserving the key legal terminology and significant arguments presented in the original text.

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