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TMI Blog2025 (4) TMI 1391X X X X Extracts X X X X X X X X Extracts X X X X ..... nking and Other Services". On the basis of third party information provided by Income Tax Department, it was alleged that the Appellant had short paid service tax amounting to Rs.34,80,934/- as per details given below :- F/Y Taxable value of service tax. (Rs.) Service tax payable (Rs.) Service tax paid (Rs.) Service tax due (Rs.) 2015-16 9193231 1333018 1333018 2015-16 2016-17 20038599 3005790 1090950 1914840 2017-18 (upto June 2018) 2932679 439902 206826 233076 Total 4778710 1297776 3480934 3. During the course of investigation, the Appellant vide letter dated 25.08.2020 intimated that they have been working as business correspondent to a banking company with respect to accounts in its Rural area branches and that the Business Correspondent services with a banking company in Rural areas is exempted from the whole of service tax under clause 29(g) of Notification No.25/2012-ST dated 20.06.2012. Copies of Form 26AS, ITRs, Balance Sheets for F/Y 2015-16 to 2017-18 and Contract Agreements had been submitted. A Show Cause Notice dated 10.12.2020 was issued proposing to demand service tax of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inhabitants of Rural area. The Appellant failed to produce any agreement/document providing that the services provided by the Appellant are for the saving bank accounts covered by Pradhan Mantri Jan Dhan Yojna. 6. The learned Chartered Accountant appearing for the Appellant submitted that :- (i) Appellant entered into agreements with following Banks for providing business correspondent services during the relevant period. (a) Marwar Ganganagar Bikaner Gramin Bank (b) Rajasthan Marudhara Gramin Bank Ltd. (c) State Bank of Bikaner and Jaipur (d) State Bank of India (e) HDFC Bank Ltd. (ii) Appellant have been providing E-Mitra services (deposit of electricity bills, telephone bills etc) to Rajcomp Info Services Ltd. It had to open at least one E-Mitra Kiosk in each Gram Panchayat. (iii) In terms of the guide lines issued by Reserve Bank of India (RBI), a business correspondent may provide services relating to disbursal of small value credit, recovery of principal/collection of interest, collection of small value deposits, etc. However, Appellant's main activity has been opening of Saving Bank Account, cash deposits & cash withdrawals in Rural area as business correspo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Chartered Accountant relied upon following decisions in support of his contention that extended period of limitation could not have been invoked. A. Lupin Ltd. Vs. CCE reported in 2020 (35) G.S.T.L. 576 (Tri). B. Jaiprakash Industries Ltd. Vs. CCE reported in 2002 (16) E.L.T. 481 (SC). C. D. N. Pandey & Company Vs. CCE reported in 2019 (28) G.S.T.L. 108 (Tri). 8. The entire demand has been raised by invoking the extended period which in view of aforesaid decisions were not invokable. As the demand is liable to be set aside on merits as well as on limitation, penalty under Sections 78, 77(1)(d), 77(2) and Rule 7C are not maintainable. 9. The learned Departmental Authorized Representative justified the impugned order. 10. Heard both the sides and perused the appeal records. 11. Following issues are arising for my consideration in the present appeal. A. Issue No.1 Whether Appellant were eligible for exemption from payment of service tax under entry 29(g) of Notification No.25/2012 dated 20.06.2012 to the extent they have provided services to banking companies. B. Issue No.2 Whether Appellant have appropriately paid service tax on providing services to Rajco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notification. 15. The word "substitute" ordinarily would mean "to put (one) in place of another"; or "to replace". In Black's Law Dictionary, Fifth Edition, at page 1281, the word "substitute" has been defined to mean "To put in the place of another person or thing", or "to exchange". In Collins English Dictionary, the word "substitute" has been defined to mean "to serve or cause to serve in place of another person or thing"; "to replace (an atom or group in a molecule) with (another atom or group)"; or "a person or thing that serves in place of another, such as a player in a game who takes the place of an injured colleague. 16. By reason of the aforementioned amendment no substantive right has been taken away nor any penal consequence has been imposed. Only an obvious mistake was sought to be removed thereby. 17. There cannot furthermore be any doubt whatsoever that when a person is held to be eligible to obtain the benefits of an exemption Notification, the same should be liberally construed". 12.3 The aforesaid decision of the Hon'ble Supreme Court has been followed by Hon'ble Madras High Court in case of Doosan Infracore India Pvt. Ltd. Vs. Asstt. Comm, Chennai repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew the decisions as cited above; for the period from 01.04.2015 to 30.06.2017, the exemption granted by way of entry No.29(g) of Notification No.25/2012 dated 20.06.2012 should be read as under :- "Entry 29 - services by the following persons in respective capacities :- (a) to (f) ................. (g) business facilitator or a business correspondent to a banking company with respect to accounts in its Rural area branch." 12.5 Appellant have also provided sample copies of agreements with State Bank of Bikaner and Jaipur (page 76 of APB) and HDFC Bank Ltd (page 102 of APB). Appellant's claim is that during the period from April, 2015 to June, 2017, they have provided services to Banks like State Bank of Bikaner and Jaipur (later merged with State Bank of India), HDFC Bank Ltd., and State Bank of India. This stands verified from Form 26AS and there can be no dispute that in these cases, services have been provided to Banking Companies only. Appellant have submitted that they have been acting as "Business Correspondent" and as per Reserve Bank of India Guidelines, a business correspondent may provide services relating to disbursal of small value credit recovery of principal/c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties shall pay for taxes under the applicable laws arising from their perations/activities/services/business under the agreement. It is, therefore, clear that the amount payable to the Appellant was inclusive of service tax and therefore the amount received by the Appellant has to be treated as cum tax price. 13.2 In view of the above, the Appellant's liability for payment of service tax during 2015-16 and 2016-17 works out to Rs.12,91,420/- as under:- 2015-16 (Rs) 2016-17 (Rs) Total (Rs) (a) Gross amount as per Form 26AS 4620764 5414645 10035409 (b) Rate of tax 14.5% 15% (c) Assessable value 4035601 4708387 8743988 (d) Tax payable 585162 706258 1291420 13.3 As per the above details, Appellants were liable for payment of service tax amounting to Rs.12,91,420/- on services provided to Rajcomp Info Services Ltd. As per para 8 of the SCN, Appellant have already paid service tax of Rs.10,90,950/- + Rs.2,06,826/- = Rs.12,97,776/-. It is therefore clear that the Appellant have paid more than the amount due to be paid by them on providing services to Rajcomp Info Services Ltd. 13.4 In view of above, I hold that there is no short payment of serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of any fraud, collusion, wilful mis-statement or suppression of fact. We, therefore, set aside the demand under the show cause notice dated 3rd May, 1993". 14.4 In case of Lupin Ltd Vs. CCE reported in 2020 (35) G.S.T.L. 576 (Tri), this Tribunal has held that there were frequent changes in law and different circulars had been issued by the Board during relevant time. Therefore, different interpretation by assessee is possible. Relevant portion of para 4.3 reads as under :- "We also find that the Tribunal in the case of Siddharth Tubes Ltd. - 2008 (228) E.L.T. 193 (Tri. - Del.) held that "We find that no evidence has been brought on record to show that the Unit No. 1 has partly sold the inputs HR. coils to the independent buyers at higher price. Therefore, the action of Unit No. 1 to reverse the credit taken on the inputs cleared as such to the Unit No. 2 in terms of the highlighted portion of the Board's circular dated 1-7-2002 can't be faulted. This case has also been upheld by the Hon'ble Supreme Court in 2016 (342) E.L.T. A31 (S.C.). In view of the above, we find that the appellant's case is squarely covered by the decision cited and therefore the issue is no longer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and non-filing of ST-3 Returns under a bona fide belief of non-taxability of the Services, would not establish suppression, with mala fide intent on the part of the assessee. In such a scenario, we are of the view that the longer period would not be available". 14.6 Following the above decisions, I hold that in the facts of the present case, the demand could not have been confirmed by invoking extended period of limitation, as the Appellant bona-fidely believed that their services to banking companies were exempted from payment of service tax under entry No.29(g) of Notification No.25/2012 dated 20.06.2012. 15. Issue-4 - Whether penalties and late fee are demandable from the Appellant. The Order-in-Original imposes following penalties and demands late fee as under :- (a) Equal penalty under Section 78 Rs. 34,80,934/- (b) Penalty under Section 77(1)(d) for not paying the tax electronically. Rs. 10,000/- (c) Penalty under Section 77(2) for violation of Provision of law. Rs. 10,000/- (d) Late fee under Rule 7C Rs. 40,000/- 15.1 It has already been held that the demand of Rs.34,80,934/- is liable to be set aside on merits as well as on limitation. Therefore, penalty u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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