2017 (10) TMI 347 - AT - Service Tax

Levy of service tax - charges / commission received for money changing activities - Held that - as per Circular of the Board, the benefit cannot be denied to the assessee - The charges collected include Commission on DC, OBC-IBC-Others, Cheque return charges, Commission on Bank guarantees, Commission of Letter of Credit, Upfront fee, Cheque issue charges, Handling charges for gold coin, Commission on DD, TT, MT, Processing fee, Incidental charges, Locker rent, ABB charges, Exchange Profit received from FEDCO, other charges, Folio charges. Out of this, the exchange profit received from FEDCO may fall under charges received for money changing. This fact has to be verified for which the matter requires to be remanded. Penalties u/s 76 and 78 - Held that - both penalties under Section 76 as well as Section 78 are imposed for equal amount which is highly erroneous and unjustified. The matter is remanded to the adjudicating authority to consider whether any amount / charges would fall under money changing activity and whether appellant is eligible for benefit of Circular No.92/3/2007 dt.12.3.2007 - appeal allowed by way of remand.

Summary

Issues:
1. Failure to discharge service tax liability for service charges collected.
2. Non-disclosure of taxable value in ST-3 return.
3. Applicability of service tax on charges/commission for money changing activities.
4. Imposition of penalties under Section 76 and Section 78.

Analysis:
1. The appellant, a Bank providing financial services, failed to discharge service tax liability for service charges collected from September 2004 to April 2006. The original authority confirmed a demand of &8377; 3,20,155/- along with interest and penalties under Section 76 and Section 78, which was upheld by the Commissioner (Appeals), leading to the current appeal.

2. During the hearing, the appellant's counsel argued that charges/commission received for money changing activities should not be subject to service tax. The appellant conceded liability for services other than money changing activities and referred to Circular No.92/3/2007-ST-dt.12.3.2007 to support their claim. The Commissioner (Appeals) rejected this ground, citing that it was not raised before the original authority.

3. The respondent's representative reiterated the findings of the impugned order, emphasizing that the appellant did not raise the plea regarding money changing activities before the original authority. The appellant's failure to raise this plea earlier was considered a valid reason for rejection.

4. The Tribunal observed that charges collected by the appellant included various types of commissions and fees, some of which might relate to money changing activities. The matter required verification and remand to determine the applicability of Circular No.92/3/2007-ST-dt.12.3.2007. The Tribunal also noted that penalties under Section 76 and Section 78 were imposed equally, which was deemed erroneous and unjustified. The penalties would need revision based on any redetermined demand.

5. Consequently, the Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for reconsideration. The authority was tasked with determining if any charges fell under money changing activities and if the appellant qualified for the Circular's benefit. The issue of penalties was also directed to be reassessed. The appeal was allowed by way of remand, providing specific terms for further consideration and decision-making.