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2017 (4) TMI 902 - CESTAT NEW DELHIBanking and Other Financial Services - taxability of amount collected by the EPFO towards, inspection charges and administrative charges, penal damages, penal interest from defaulters. - appellant is involved in collection of contribution from the employers covered by the provision of the Act, collection of inspection charges and administrative charges, penal damages, penal interest from defaulters and disburse accumulated provident fund to the Members alongwith interest, pay various kinds of pension benefits to members and to family members and incur expenses in administering the scheme - Revenue entertained a view that the appellants are engaged in providing taxable service under the category of “Banking and Other Financial Services - Held that: - the appellant is a statutory authority created for a specified welfare function. Section 1 (3) of EPMF & MP Act stipulates that it applies to establishments of specified categories, mainly employing 20 or more persons. The schemes framed under the Act are to be laid in the Parliament as mentioned in Section 6D. Section 7A talks about determination of moneys due from employers. Such determination, in case of dispute, will be resolved by the officers mentioned therein. The appellant is concerned with ‘Public’ – namely the employers who are governed by the EPMF & MP Act. The employers are governed by the said Act for delivery of welfare benefits to the employees (members of the Fund). The appellant is an “authority” having vested with statutory powers to enforce the due contribution of fund, administration charges, penal charges etc. The appellant has power to impose penal consequence on employers for violation of any provisions of EPMF & MP Act, and also for coercive recovery of dues. The fee and other charges collected by the appellant from the employers in the present dispute are fixed by the law with no discretion or option vested with appellant or the employers. As such these cannot be considered as amounts received for providing any taxable service of BOFS. The employees who ultimately benefit, have not paid any consideration to the appellant. They only contributed their part of fund, through the employer, to the appellant. The contribution to the fund is not the subject matter of disputed tax liability. The other charges like administrative charges, inspection charges paid by the employers, are being subjected to service tax. We find that in the absence of a service provider and service recipient relation between the appellant and the employers, no service tax liability can arise in the transaction. The exemption now granted vide N/N. 9/2010-ST to EPFO (appellant) has no relevance to decide their tax liability during the present disputed period which is under pre-negative list based tax regime. We note that the service tax liability on various services rendered by Government or statutory /public authorities under went statutory changes after the new tax system (based on negative list) was introduced with effect from 01/07/2012. In fact, the Circulars dated 18/12/2006 and 23/08/2007 (code 999.01) issued in the pre-negative list regime are no longer applicable, as clarified by Board vide Circular No. 192/02/2016 – ST dated 13/04/2016. The appellants are not liable to pay service tax on their statutory activities performed in terms of EPMF & MP Act, 1952 - appeal allowed - decided in favor of appellant.
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