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TMI Blog2018 (11) TMI 1673X X X X Extracts X X X X X X X X Extracts X X X X ..... he agent of RBI under Section 45 of the Reserve Bank of India Act, 1934 and thus, should be entitled for exemption under Notification No.22/2006-S.T. dated 31.05.2006 from payment of service tax on taxable services provided to or by RBI. It has further been held that as an agent of RBI, since the scheduled bank is transacting sovereign Government business, the same should not be subjected to levy of service tax. Appeal allowed - decided in favor of appellant. X X X X Extracts X X X X X X X X Extracts X X X X ..... e service tax demand. The matter was adjudicated vide order dated 16.06.2010, wherein service tax demand of ₹ 42,02,486/- along with interest was confirmed against the appellant. The service tax amount of ₹ 37,73,547/- with interest amounting to ₹ 8,70,684/- already paid by the appellant before adjudication of the matter was appropriated against such confirmed demands. Besides, the order also imposed penalties under Section 76, 77 and 78 of the Act ibid. On appeal, the learned Commissioner (Appeals) vide the impugned order dated 28.03.2014 has upheld the adjudged demand confirmed on the appellant. 3. Learned Advocate appearing for the appellant submitted that the issue arising out of the present dispute is no more res in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be subjected to levy of service tax. The relevant paragraphs in the said decision of the Larger Bench are extracted herein below:- "7. The issue that falls for consideration of this Larger Bench is whether the respondent herein is eligible for the benefit of exemption Notification No. 22/2006-S.T., dated 31-5-2006. The respondent herein is a public sector/nationalized bank established under Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and as defined in the State Bank of India (Subsidiary Banks) Act, 1959 and is authorized to collect the taxes payable by the citizen of India to the Government of India. The respondent herein collects the taxes and remits to RBI, for which action, the RBI extends a percentag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso remit all the money on behalf of the Government of India. Section 21A of the RBI Act also empowers the RBI to transact Government business of States on agreement. Holistically, reading of Sections 20, 21 and 21A of the RBI Act, would mean that RBI is supposed to receive all money on behalf of Govt. of India and remit the same and no one else is authorized to do so. If this be so, various taxes like collection of central excise, customs and service tax and amounts collected by sale of public deposit, RBI bonds, special discount scheme, and payment of pension, etc., has to be done only by RBI. Considering the nature of enormous transactions involved in collection of taxes, Section 45 of the RBI Act has provided as under :- "45. Appoint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k to transact business as its agent at any place in India. Drawing power from this Section, RBI appoints various national banks/ public sector banks for collection of various taxes and making payment of pension, etc. This would mean that various national banks are agents of the RBI. 7.5 The Central Govt. of India by Notification No. 22/2006- S.T. has given exemption from the payment of service tax of any taxable services provided to or by RBI either in India or under Reverse Charge Mechanism. In our view as the respondent-assessee is an agent of RBI, exemption granted by Notification No. 22/2006-S.T., needs to be extended to respondent. In our view the claim of the respondent from exemption of the service tax on the commission received f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Central Government to transact Government business. Hence, once State Bank of Patiala has been appointed as agent of RBI, it is transacting Government business which is in the nature of a sovereign function performed on behalf of the Government and hence not liable to Service Tax. 7.8 In our considered view the judgment of the Tribunal in the case of Canara Bank [2012-TIOL-790-CESTAT-AHM = 2012 (28) S.T.R. 369 (Tri.-Ahmd.)], has correctly interpreted Notification No. 22/2006-S.T. and is correct exposition of the law. In our view the said judgment does not require any reconsideration. 7.9 As regards the case law cited by the learned DR and reliance placed in the case of Malwa Industries Ltd. (supra), we find that in that case, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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