2016 (4) TMI 984 - AT - Service Tax

Service tax liability - Amount received as interest on discounting of bills and depository services - Chartered Accountant of the appellant bank has stated that commission received on exchange collected on in land bill purchased and discounted during the period includes value of interest on which tax liability will not arise. Also the Chartered Accountant of the appellant has stated that service tax on the depositary charges collected by Nagpur branch is discharged by the Mumbai depositary services branch and was remitted to the government treasury by Mumbai branch - Held that - the order of the first appellate authority is incorrect in as much these evidences were over looked by the first appellate authority. Therefore the impugned order is unsustainable and set aside. - Decided in favour of appellant

Summary

Issues Involved:
1. Service tax liability on interest received on discounting of bills
2. Service tax liability on depository charges

Analysis:

Issue 1: Service tax liability on interest received on discounting of bills
The appeal was filed against Order-in-Appeal No. ST/369/NGP/2010 dated 18/10/2010. The core issue revolved around the service tax liability on the interest received by the appellant bank on bill discounting for the period 1.4.2005 to 31.3.2008. Upon examination of the records, it was noted that the Chartered Accountant of the appellant bank clarified that the commission received on exchange collected on in land bill purchased and discounted did not include the value of interest triggering tax liability. This assertion was supported by precedents such as UCO Bank 2014 (36) S.T.R. 1169 and State Bank of Indore 2011 (23) S.T.R. 346. The tribunal concurred with this view, emphasizing the importance of the Chartered Accountant's analysis in determining the tax liability.

Issue 2: Service tax liability on depository charges
The second aspect of the case involved the service tax liability on the depositary charges collected by the Nagpur Branch. The Chartered Accountant of the appellant bank verified the books of account and confirmed that the service tax on the depositary charges collected by the Nagpur branch was duly discharged by the Mumbai depositary services branch and remitted to the government treasury. Additionally, the amounts collected as interest on bill discounting were substantiated by various vouchers attached to the appeal memoranda. The tribunal observed that the first appellate authority had overlooked these crucial pieces of evidence, leading to an incorrect order. Consequently, the tribunal deemed the impugned order unsustainable and set it aside, ultimately allowing the appeal.

In conclusion, the tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal based on the factual and evidentiary considerations presented during the proceedings.