2018 (2) TMI 1127 - AT - Service Tax

Banking and other financial services - Whether the appellant is liable to discharge the Service Tax liability on the amount retained by him while conducting the Chit Fund services? Held that - in the case of Margadarshi Chit Funds 2017 (7) TMI 224 - SUPREME COURT OF INDIA it was held that the amount retained by the Chit Fund Manager (like the appellant herein) is not liable for tax under Finance Act, 1994 under the category of Banking and other financial services - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability to discharge Service Tax on amount retained in Chit Fund services under Cash Management Service category.

Analysis:
The appeal in question was against Order-in-Original No. PUN-EXCUS-003-COM-013-13-14 dated 30.09.2013. The central issue revolved around determining whether the appellant was obligated to discharge the Service Tax liability on the amount retained while conducting Chit Fund services under the Cash Management Service category falling under Banking and Other Financial Services for the period 1.6.2007 to 31.3.2012. The lower authorities had deemed a portion of the collected amount from Chit Fund contributors as taxable under the aforementioned category. However, the appellant contested this classification, citing a precedent set by the Apex Court in the case of Margadarshi Chit Funds (P) Ltd. 2017 SCC ONLINE SC 805. The Apex Court's ruling established that the amount retained by the Chit Fund Manager, akin to the appellant, was not subject to taxation under the Finance Act, 1994, within the Banking and other financial services category. This decision was pivotal in resolving the issue at hand, as it clarified the conflicting views held by the High Courts of Andhra Pradesh and Kerala regarding the tax liability of such retained amounts.

Upon thorough examination of the Apex Court's judgment in the Margadarshi Chit Funds case, it was evident that the issue at hand had already been conclusively addressed. The Apex Court's ruling negated the need for further deliberation on the matter, as it definitively established that the amount retained by the Chit Fund Manager, including the appellant in this instance, did not fall under the purview of taxation as per the Finance Act, 1994, under the Banking and other financial services category. Consequently, the Appellate Tribunal found merit in the appellant's contentions, leading to the decision to set aside the impugned order. The Tribunal's decision was grounded in the settled law provided by the Apex Court, thus warranting the allowance of the appeal and subsequent relief for the appellant. The operative part of the order was pronounced in court, officially overturning the initial decision and granting relief to the appellant as per the established legal precedent.