2018 (1) TMI 59 - AT - Service Tax

N/N. 13/2003-ST dt. 20/06/2003 - business auxiliary services provided by a commission agent - Held that - identical issue has come up before the Tribunal in the case of CST, Delhi Vs. P.N. Vijay Financial Services (P) Ltd. 2008 (9) TMI 72 - CESTAT, NEW DELHI wherein it was held that no service tax will be payable on similar sale of mutual fund units - no service tax will be payable on such commission received during the period 01/07/2003 to 30/06/2004 during which the appellant will be eligible for the benefit of exemption N/N. 13/2003-ST dt. 0/06/2003 - Appeal allowed.

Summary

Issues:
Interpretation of Notification No.13/2003-ST for exemption on service tax charged on commission received for selling mutual fund units.

Analysis:
The appeal was filed against the Order-in-Appeal No.188/2006 dated 22/12/2006, where the appellant, engaged in stock broking and financial services, was charged service tax on the commission for selling mutual fund units during the period 01/07/2003 to 30/06/2004. The appellant claimed exemption under Notification No.13/2003-ST, which exempted business auxiliary services provided by a commission agent. The dispute arose as the Revenue argued that mutual fund units do not qualify as goods, making the service taxable under Business Auxiliary Service. The Tribunal considered the definition of goods under Section 65(50) of the Finance Act, 1994, and Section 2(7) of the Sale of Goods Act, 1930, concluding that mutual fund units fall under the promotion, marketing, or sale of goods. Relying on a similar case precedent, the Tribunal held that the appellant was not liable to pay service tax on the commission earned from selling mutual fund units, as it qualified for exemption under Notification No.13/2003-ST.

The counsel for the appellant referred to a previous Tribunal case, CST, Delhi Vs. P.N. Vijay Financial Services (P) Ltd., where it was held that no service tax was payable on the sale of mutual fund units. The Revenue justified the impugned order, but the Tribunal, after reviewing the records and the precedent case, concluded that the commission earned from the sale of mutual fund units falls under the exemption of Business Auxiliary Service provided by a commission agent. The Tribunal emphasized that mutual fund units are considered goods and, therefore, the service tax liability does not apply to such transactions. Consequently, the impugned order was set aside, and the appeal was allowed, determining that no service tax was payable on the commission received by the appellant during the relevant period.

In summary, the Tribunal's decision was based on the interpretation of Notification No.13/2003-ST regarding the exemption of service tax on the commission earned from selling mutual fund units. By analyzing the definition of goods and the nature of the services provided, the Tribunal concluded that the appellant was eligible for the exemption under the notification, following a similar case precedent. The judgment clarified that mutual fund units are considered goods, falling under the promotion or sale of goods category, making the appellant exempt from service tax liability on the commission received for such transactions.