2023 (8) TMI 253 - AT - Service Tax

Nature of activity - Rendering of service or not - banking and other financial services or not - HELD THAT - The case of the appellant appears to be that Service Tax is payable on bill discounting under banking and other financial services (BFS) only when the service is rendered by a banking company or financial institution including a non-banking financial company. They would thus contend that they are only a body corporate and not liable to pay Service Tax as they cannot be classified under the category of banking company or financial institutions. From the reply to the Show Cause Notice and the contentions, it is found that the appellant has not denied the fact of giving bill discounting facility to some of its customers, but had denied liability only on the ground that they are not a banking company or a financial institution. From the definition of BFS, it is found that sub-clause (ix) covers even bill discounting facility and as such, the appellant being a limited company, is also covered under the said definition - the definition makes it clear that such bill discounting facility could be offered not only by a banking company or a financial institution, but also a body corporate. There are no justifiable reasons to interfere with the impugned order and hence, the appeal is dismissed.

Summary

Issues involved:
The issues involved in the judgment are whether the appellant's activity of bill discounting falls under the category of 'banking and other financial services' for the purpose of Service Tax liability.

Comprehensive details:
The appellant, a registered service provider for Goods Transport Operator Service, received amounts for the periods 2007-08 and 2008-09. The Department raised a doubt regarding the nature of the appellant's activity, leading to a Show Cause Notice proposing Service Tax under 'banking and other financial services'.

In response, the appellant denied rendering any service under 'banking and other financial services'. However, the Deputy Commissioner confirmed the demand, leading to the appellant filing an appeal which was dismissed by the first appellate authority.

The appellant's advocate argued that the bill discounting was a trade-related activity, not a service, as it was part of a commercial transaction between the seller and the buyer. The appellant did not receive consideration for initiating the bill discounting scheme.

On the other hand, the Revenue supported the lower authorities' findings, citing the definition of 'banking and other financial services' to include bill discounting. They also relied on a previous CESTAT order.

The Tribunal considered whether the appellant's activity fell under the definition of 'banking and other financial services'. The appellant contended that they were not a banking company or financial institution, hence not liable for Service Tax. However, the Tribunal found that the appellant, being a body corporate, was covered under the definition of 'banking and other financial services'.

The Tribunal's decision was supported by a previous case, and as the appellant did not deny providing bill discounting facility, the appeal was dismissed.

The judgment was pronounced on 04.08.2023.