2019 (1) TMI 501 - AT - Service Tax

Banking and Other Financial Services - amount collected by way of chit - person liable to pay service tax - Held that - This issue is no more res integra and has been settled by the apex court in the case of UOI vs. Margadarshi Chit Funds (P) Ltd. 2017 (7) TMI 224 - SUPREME COURT OF INDIA , where it was held that chit fund business was not covered by sub clause (v) of subsection (12) of Section 65 even after its amendment by Finance Act, 2007 - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant, a cooperative society, is liable to pay service tax.
2. Whether the impugned order rejecting the appellant's appeal is sustainable in law.
3. Interpretation of the law laid down by the apex court in UOI vs. Margadarshi Chit Funds (P) Ltd.
4. Consideration of the directions given by the Hon'ble High Court.

Analysis:
1. The appellant, a cooperative society, was asked by the Superintendent of Central Excise to provide account details to determine service tax liability. The appellant contended they were not liable as the service provided did not fall under service tax. The Superintendent rejected this objection, leading to a writ petition filed by the appellant. The High Court directed the competent authority to decide on the liability. The Deputy Commissioner later held the appellant liable, which was challenged in the appeal before the Commissioner (A) who rejected it.

2. The appellant argued that the impugned order was not sustainable in law, citing the case of UOI vs. Margadarshi Chit Funds (P) Ltd. The appellant claimed they did not fall under entities liable to pay service tax for banking services. Referring to the apex court's decision, the appellant contended that chit fund business was not covered by the relevant section. The Tribunal agreed, following the apex court's judgment, and set aside the impugned order, allowing the appellant's appeal.

3. The Tribunal found that the issue was settled by the apex court's judgment, which clarified that chit fund business was not covered by the relevant section. The Tribunal emphasized that the High Court's judgment was overruled, affirming the conclusion of the Andhra Pradesh High Court. Based on this interpretation, the Tribunal held the impugned order unsustainable in law and allowed the appellant's appeal with consequential relief.

4. The Tribunal considered the directions given by the Hon'ble High Court and the law laid down by the apex court, concluding that the impugned order was not sustainable. By following the apex court's ratio, the Tribunal set aside the order, granting relief to the appellant.