9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (11) TMI 165 - AT - Service TaxBusiness Auxiliary services - commission received from the RBI by the banks - appellant carried out various Government transactions on behalf of the Central and the State Governments and have received commission - taxability - N/N. 22/2006-ST dated 31.05.2006 - Held that - The Notification exempts taxable services provided or to be provided by any person to the Reserve Bank of India when the service tax for the service is liable to be paid by the Reserve Bank of India under Sub-Section (2) of Section 68 of the Finance Act, 1994 read with Rule 2 of the Service Tax Rules, 1994 - It further exempts taxable services provided or to be provided to any person by the Reserve Bank of India. Demand set aside - appeal allowed - decided in favor of appellant.
Issues:
1. Taxability of commission received by a nationalized bank for agency services provided to the Central and State Governments. 2. Applicability of Notification No. 22/2006-ST to the bank acting as an agent of the Reserve Bank of India. 3. Imposition of penalties under Sec.77 & 78 of the Finance Act, 1994. Analysis: Issue 1: Taxability of Commission The appellant, a nationalized bank, received commission from the RBI for agency services provided to the Central and State Governments. The tax authority issued a show cause notice demanding service tax on these services, leading to a dispute. The appellant argued that the commission received for maintaining pension accounts of Government employees, a sovereign function, should not be liable to tax. The Tribunal referred to previous judgments, including Canara Bank, to establish that banks acting as agents to the RBI for such services are not liable to service tax. The Tribunal upheld this position, stating that the commission received by the bank for acting as an agent to the RBI is exempt from service tax. Issue 2: Applicability of Notification No. 22/2006-ST The appellant contended that Notification No. 22/2006-ST should apply to them as they were acting as an agent of the RBI and receiving commission. The Tribunal analyzed the notification and the legal framework, concluding that the exemption from service tax granted to the RBI should extend to its agents, such as the appellant bank. The Tribunal emphasized that the law acknowledges the liability of the agent to pay service tax, but in the absence of such liability for the RBI, the agent should also be exempt. Therefore, the Tribunal held that the appellant bank was entitled to the benefit of the exemption provided under Notification No. 22/2006-ST. Issue 3: Penalties under Sec.77 & 78 The appellant challenged the imposition of penalties under Sec.77 & 78 of the Finance Act, 1994, arguing that it contravened Sec.80. The Tribunal examined the penalties imposed by the Commissioner and the legal provisions. Referring to case laws and legal definitions, the Tribunal found that the penalties were not justified in this case. The Tribunal dismissed the penalties under Sec.77 & 78 and ruled in favor of the appellant on this issue. In conclusion, the Tribunal allowed the appeal, set aside the impugned order, and held that the commission received by the bank for acting as an agent to the RBI was exempt from service tax. The Tribunal's decision was based on established legal principles and precedents, providing clarity on the taxability of such commission in similar cases.
|
