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TMI Blog2016 (6) TMI 1203X X X X Extracts X X X X X X X X Extracts X X X X ..... -operative Bank Limited is running banking and other financial services as per its object and has expressed itself in its bye-laws that wherever the word ‘society’ appears that be read as ‘Bank’. Therefore, by its own acts and deeds as depicted from the petition and reflected from the documents annexed to the writ application and also the documents annexed to the affidavit-in-opposition, this Court has no alternative but to hold that the petitioner is rendering services to its customers within the meaning of expression ‘taxable services” as defined under Section 65(105)(zm) and is liable to pay the service tax under FA notwithstanding the petitioner being registered under West Bengal Co-operative Societies Act, 1983. Petition dismissed - decided against petitioner-assessee. - W.P. No. 11855 (W) of 2006 - - - Dated:- 16-6-2016 - Shivakant Prasad, J. Shri Pabitra Charan Bhattacharjee and Asim Kumar Roy, for the Petitioner. Shri K.K. Maity, for the Respondent. ORDER The points of law involved in this writ petition are as follows : (I) Whether the Co-operative Credit Society constituted under the Co-operative Societies Act, 1983 passed by the West Bengal Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een framed under Section 147 of the Co-operative Societies Act. 7. It is submitted that the petitioner s Co-operative Society has been constituted under the West Bengal Co-operative Societies Act, 1983 which is West Bengal Legislation enacted in exercise of its legislative power under Entry No. 32 of List II of the 7th Schedule of the Constitution providing for incorporation, regulation and winding up of the co-operative societies. Entry No. 43 of List I of 7th Schedule specifically excludes from its purview the incorporation, regulation and winding up the co-operative societies and Entry No. 45 of List I of the 7th Schedule relates to banking which by necessary implication excludes co-operatives banking. 8. It is also submitted that the Finance Act, 1994 contained in Chapter V provides for levy of service tax and sub-clause 9(C) of Section 65 of the said Act defines banker to an issue means in a bank included in the 2nd Schedule to the Reserve Bank of India Act, 1934 coordinating on activities relating to an issue, including acceptance of application, allotment of money, call money, refund of application money, payment of dividend and interest warrants. 9. Accordingly, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1949 and accordingly the co-operative bank does not come under sub-clause (ii) of Section 45 of the Act. 16. Further attention is invited to provision of sub-section (12) of Section 65 of the Act, which defines banking and other financial services. In order to come under sub-section (12), it must be a banking company, ergo, it is submitted that since co-operative society is not a banking company either under sub-section (10) or under sub-section (11), it cannot come under sub-section (12) of Section 65 of the Act providing financial services. Accordingly, the service tax is not leviable as against the petitioner s co-operative society. 17. Learned counsel for the petitioner has fortified his stand by relying on the authority in the case of Greater Bombay Co-operative Bank Ltd. v. United Yarn Tex (P) Ltd. and Ors. reported in (2007) 6 SCC wherein it has been held thus : The distinction between peoples co-operative banks serving their members and corporate banks doing commercial transactions is fundamental to the constitutional dispensation and understanding co-operative banking generally and in the context of co-operative banking not coming under the ambit of the Banking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Contai Co-operative Bank Limited wherein the Central Excise, Haldia-II Division issued the notice to the writ petitioner which shows that the writ petitioner has been referred to as the assessee being the holder of the certificate of Registration in Form ST-2 under Section 69 of the Finance Act, 1994, Bearing No. AACCC 2522LST001, dated November 25, 2004 in the category of Banking and other Financial Services and has undertaken to comply with the conditions prescribed in the Service Tax Rules, 1994. 23. In this context, learned counsel for the petitioner submits that this registration under service tax was under duress but I do not find any such averment or allegation made in the writ application. By show cause notice, the petitioner was given an opportunity of being heard in person before the case is adjudicated within 30 days of the receipt of notice, otherwise the matter was required to be adjudicated ex parte. A penalty in terms of Section 77, Chapter V of the Finance Act, 1994 as amended was leviable as against the petitioner assessee for contravention of Sections 69 and 70 of the Chapter V of Finance Act as amended and rules made thereunder. This is that show cause notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Act, 1994 as amended. It is also pointed that the letter dated October 15, 2004 was not issued by the Director General of Service Tax (DGST) but actually it is a letter addressed to DGST. DGST by its Letter No. V/DGST/21/BFS/7/2001/1708, dated September 20, 2005 clearly remarked that the petitioner is liable to pay service tax. On the contrary, the Reserve Bank of India had pointed out that they are not in a position to clarify the applicability of the service tax and the petitioner was directed to approach the Director General of Service Tax who is the proper authority to decide the same. 27. The Director General, according to the respondents, is the appropriate authority who can take right decision in connection with the question of imposition of service tax. Accordingly, it is submitted by learned counsel for the respondents that the petitioner paid the service tax but when the appropriate authority issued show cause notice to clarify the queries raised in the said show cause notice the petitioner without giving any plausible reason and/or reply to the same challenged the same before this court by passing all appropriate forum. 28. Learned counsel for the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondents has referred to a decision in the case of Kalladikkode Service Co-operative Bank Ltd. v. Union of India, reported in 2015 (40) S.T.R. 240 (Ker.). In this case, the petitioners establishment was a co-operative society registered under the relevant provisions of the Kerala Co-operative Societies Act like in the present case the writ petitioner has been registered under the West Bengal Co-operative Societies Act. 34. Similar question was raised as to whether the said co-operative society is liable to pay service tax the Hon ble Court relegated the petitioner to persue the matter before third respondent/Superintendent of Central Excise in response to Exts. P1 and P3 proceedings. The third respondent/Superintendent of Central Excise/competent authority was directed to consider the reply submitted by the petitioner by way of Exts. P2 and P6 and to hear the petitioner on the question of their liability to pay service tax; and if the liability is upheld, direction be given to the petitioner to produce further documents for quantification of the liability and to finalise the issue within two months from the date of receipt of a copy of the judgment. Thus, it has been held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was the validity of amendment made by the Finance Act, 2001 relating to imposition of service tax on hire-purchase and leasing services. It was held that there are two different and distinct transactions, viz., the financing transacting and equipment leasing/hire-purchase transaction. The former is exigible to service tax u/s 66, whereas the latter would be exigible to local Sales Tax/VAT. What the impugned tax seeks to do is to tax financial facilities as they come under banking and other financial services u/s 65(12). The impugned tax is not on material or sale. The State Legislature is competent to impose tax on sale relatable to Entry 54 of List II, tax on services , would be within legislative competence of Parliament under Article 248 read with Entry 97, List I of 7th Schedule. 39. In the said decision a reference to a decision in the case of Bharat Sanchar Nigam Limited reported in (2006) 3 SCC 1 = 2006 (2) S.T.R. 161 (S.C.) relied on by learned counsel for the petitioner was made. The observation made in Paragraph 39 is reproduced hereunder for profitable conclusion. 39. The problem relating to the power of the States to levy tax on the sale of goods was then re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation before the competent authority under the Finance Act. 45. I have gone through the above referred decisions and on marshalling the facts as depicted from the petition, affidavit-in-objection and affidavit-in-reply thereto, this Court holds that the petitioner/Contai Co-operative Bank Limited is running banking and other financial services as per its object and has expressed itself in its bye-laws that wherever the word society appears that be read as Bank . Therefore, by its own acts and deeds as depicted from the petition and reflected from the documents annexed to the writ application and also the documents annexed to the affidavit-in-opposition, this Court has no alternative but to hold that the petitioner is rendering services to its customers within the meaning of expression taxable services as defined under Section 65(105)(zm) and is liable to pay the service tax under Finance Act notwithstanding the petitioner being registered under West Bengal Co-operative Societies Act, 1983. 46. Thus, the aforementioned points of law are answered in the affirmative. 47. In the context of what has been discussed above, the writ petition has no merit and is, thus, dismiss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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