TMI Blog2014 (7) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... at all loans raised by a State Government shall form one consolidated fund to be called the Consolidated Fund of that State. If that be the reality of the transaction, the expenditure incurred by the appellant would be expenditure incurred for servicing its own activity, of raising funds for its purposes though reimbursed by the State Government, to the extent of the incurred administrative expenses. Such reimbursement, in our view would not amount to payment of consideration for rendition of the tanable service, by the appellant to that Government. - Decided in favor of assessee. However, demand of ₹ 36370/- on ‘Technical Testing and Analysis/ Technical Inspection and Certification’ Services confirmed with interest - penalty wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fices were asked to remit the service tax due under this category. That was the only defence. Since there was no remittance of this amount either by the appellant or its local units, the demand under the adjudication order to the extent of ₹ 36,370/- is impeccable and is liable to be confirmed. Ld. Counsel for the appellant does not demur on this position. 4. A demand of ₹ 2,74,078/- stands confirmed under Banking and other Financial Services . The analyses leading to confirmation of the demand under this head is set out in paragraphs 14 to 16 of the impugned order. Paragraph 14 sets out the definition of Banking and other Financial Services as provided in Section 65 (12) of the Act; and enumerated to be a taxable service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate Government however waived guarantee commission for providing the guarantee. Government has also undertaken to reimburse any interest deficit suffered by the appellant (being the difference in the interest earned by it on funds raised and interest payable by the appellant to investors in the Bonds. There are other terms agreed between the State Government and the appellant with regard to repayment of the principal, undertaken by the Government to reimburse the deficit interest component in a timely manner etc. 7. The demand of ₹ 2,74,078/- is on the administrative expenses reimbursed by the State Government to the appellant (at an agreed rate/ percentage of loan raised and deposited in the appellants P.D. account). 8. Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not flow into the Consolidated Fund of the State, as required under Article 266 of the Constitution, the activities of the appellant are clearly and truly a service to itself and not to any other person/ entity. Administrative expenses reimbursed by the Government of Rajasthan, on this analyses, are by way of a grant by the State Government for the financial stability of the appellant which is an instrumentality of that State. It is therefore, clear that since the Bonds are issued in its own name and funds so raised are deposited in the appellant s own P.D. account, no rendition of a tanable service by the appellant to the State Government occurs. 11. Section 65(12) of the Act defines this taxable service in sub-clauses (i) to (viii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the appellants specified activity might fall within the ambit of sub-clause (v), we express our inability to accept this proposition either. The appellant is raising funds by way of loans on issue of Bonds in its own name, which cannot be considered as managing the funds of the State Government. The fact that the State Government guarantees repayment of loans by the appellant (under Bonds issued by it) would not amount to issue of the Bonds by the State Government. The discipline of Article 266 mandates that all loans raised by a State Government shall form one consolidated fund to be called the Consolidated Fund of that State. Since clearly the funds received by the appellant consequent on the Bonds issued by it and in its own name ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
