2017 (11) TMI 1400 - AT - Service Tax

Business Auxiliary services - Banking and other financial services - deposit processing services - insurance policy processing services - accounting services - levy of service tax - Held that - it is incorrect to hold that the activities of deposit processing, insurance policy processing and accounting services would fall within the banking and other financial services - demand set aside. However, the issuance of power plus card for purchase of fuel, in our view, being issuance of credit card or lending would fall within the ambit of banking and other financial services. On these activities, the appellants are liable to pay service tax - demand upheld. Penalty u/s 76 and 78 - Held that - Since we have already held that the appellant is not liable to pay service tax on the above such services, except for power plus cards for purchase of fuel, we are of the view that the imposition of penalties is unwarranted and requires to be set aside. Appeal allowed in part.

Issues involved:
Classification of services under Banking and other financial services for a non-banking financial institution, refund claims for service tax paid, classification of specific services like deposit processing, insurance policy processing, accounting services, employee administration services, ATM card embossing services, and power plus cards for purchase of fuel.

Analysis:

1. Classification of Services:
The appellant, a non-banking financial institution, registered under the Service Tax Department, was providing various financial services but not paying service tax initially. The department contended that the services provided fell under Banking and other financial services category. The appellant paid service tax under protest and later filed refund claims, arguing that the activities did not fall under the said category. The original authority confirmed the classification of services under Banking and other financial services, except for employee administration services and ATM card embossing services classified under Business Auxiliary Services. The appellant's appeal against this classification was dismissed by the Commissioner (Appeals).

2. Refund Claims:
The appellant filed refund claims for different periods, citing that the activities did not fall under Banking and other financial services. The refund claims were partially sanctioned, but the adjudicating authority rejected the claims for the balance amount. The appellant appealed against this decision, seeking a refund of the service tax paid for services other than issuing power plus cards for fuel.

3. Arguments and Findings:
The appellant's counsel argued that activities like deposit processing, insurance policy processing, and accounting services did not fall under Banking and other financial services as per the definition provided. The Tribunal agreed, holding that these activities did not fall within the said category. However, the issuance of power plus cards for fuel was considered to fall under Banking and other financial services, making the appellant liable for service tax on this specific service.

4. Penalty Imposition:
The adjudicating authority had imposed penalties under sections 78 and 76 of the Finance Act, 1994, which were set aside by the Tribunal due to the finding that the appellant was not liable to pay service tax on most services except for issuing power plus cards for fuel.

5. Conclusion:
The Tribunal modified the impugned order, setting aside the demand for service tax on services other than issuing power plus cards for fuel. Additionally, all penalties imposed were also set aside. The appeal was partly allowed in favor of the appellant with consequential relief.

This detailed analysis of the judgment highlights the issues, arguments presented, findings of the Tribunal, and the ultimate decision regarding the classification of services and refund claims in the case.

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