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TMI Blog2024 (2) TMI 1086X X X X Extracts X X X X X X X X Extracts X X X X ..... D THAT:- The definition clauses of each statute must be read with the object and purpose of that statute only as intended by the legislature. Various statutes such as SEBI, GST, IBC recognize trust as a person whereas the Finance Act does not. The issue involved in this case is liability to pay Service tax, therefore, the relevant statute is the Finance Act. Hence, the contention urged by Revenue is untenable. The CESTAT has recorded in the impugned order that, since the trust is treated as juridical person under SEBI, there is no reason why it should not be treated as a juridical person for taxation. This view of the CESTAT is untenable because, for the purpose of levy of tax, the entity has to be recognized under the said Act - Accordingly, the first question is answered as affirmative and in favour of the assessee. Whether the CESTAT has erred in holding that the Appellant cannot be treated as a trust and failed to recognize its pass-through status, for the purpose of taxation statues? - HELD THAT:- The assessee acts as a pass through , wherein funds from contributors are consolidated and invested by the investment manager. It acts as a trustee holding the money belonging to con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are, Appellant/Assessee is a v enture capital trust [Established under Indian Trust Act, 1882] . Institutional investors contribute money to the trust fund and the same is managed by an Investment Manager. 4. An investigation was conducted by Anti-Evasion Unit of the Jurisdictional Commissionerate against assessee. The investigating team took a view that assessee had retained certain portion of income distributable to the contributors which appeared to be service charge/fee for having managed the asset of the trust/fund on which service tax was required to be paid under the category of banking and other financial services as defined under Section 65 (105)(zm) of the Finance Act, 1994 [ the Act ] . 5. A show cause notice [dated March 25, 2011] was issued to assessee proposing to demand service tax on expenses incurred by the assessee and the amount paid to Class C investors as return on investment . Assessee submitted its reply contending inter alia that it was not liable to pay service tax because: assessee was not covered within the definition of a person as defined under the Act; assessee is not providing any service to the contributors; and assessee is not receiving any consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d makes profit by re-investing and distributes the profits to investors; and retains some portion of the same to its benefit; assessee s funds are registered under VCF [Venture Capital Fund] regulations issued under Securities and Exchange Board of India Act, 1992 [ the SEBI Act ] and accordingly assessee is a separate legal entity; assessee has a bank account, obtains necessary approvals, deducts TDS [Tax Deduction at Source] and has registration from SEBI, which only a person can qualify; Doctrine of mutuality does not apply to the instant case, since definitions in the contribution agreements indicate a relationship between a buyer and a seller as the phrase term used is purchase of units ; various articles of IOT [Indenture of Trust] of the fund are contrary to the principle of mutuality. 10. In support of above contentions, Shri. Neeralgi has placed reliance on following authorities: i. Commissioner of Central Excise vs. Tirupathi LPG Industries Ltd 2017 (351) ELT 149; ii. Premier Irrigation Equipment Ltd vs. UOI 1998 (100) ELT (Kar); iii. Principal Commissioner of Central Excise and ST vs. Raja Dyeing 2017 (5) G.S.T.L. 231 (P H); iv. Paramount Biotech Industries vs. UOI (2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person whereas the Finance Act does not. The issue involved in this case is liability to pay Service tax, therefore, the relevant statute is the Finance Act. Hence, the contention urged by Shri. Neeralgi is untenable. 16. The CESTAT has recorded in para 37.4 of the impugned order that, since the trust is treated as juridical person under SEBI, there is no reason why it should not be treated as a juridical person for taxation. This view of the CESTAT is untenable because, for the purpose of levy of tax, the entity has to be recognized under the said Act. 17. Accordingly, we answer the first question as affirmative and in favour of the assessee. Re: Question No.(ii) 18. It was argued by Shri. Shivadass that assessee-trust was created by the settlor-ICICI Venture Funds Management. Assessee Trust collects funds from entity like LIC, SBI etc. Based on Investment Manager s advise the trusts invest in portfolio companies. There are different classes of unit holders. Class A and B unit holders are over and above 100 Crores. Class C Unit holder is an investment manager in itself. 19. Shri. Shivadass gave a hypothetical example about the transaction details of the entire fund management as f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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