2023 (5) TMI 522 - AT - Service Tax

Levy of Service Tax - banking and other financial services - services to the employers in relation to asset management of Employees Provident Fund Employees Deposit Linked Insurance Scheme and Employees Pension Scheme - HELD THAT - In the case of the appellant for the period 01.04.2004 to 31.03.2009 the order dated 01.07.2010 passed by the Commissioner was assailed by the appellant before the Tribunal and the Tribunal by order dated 13.04.2017 set aside the order passed by the Commissioner and allowed the appeal. In view of the decision of the Tribunal with which there are no reason to disagree the demand confirmed for the period from 01.04.2009 to 30.06.2012 deserves to be set aside. For the period from 01.07.2012 to 31.03.2014 the Commissioner Siliguri by a detailed order dated 03.09.2019 in the case of the appellant for the period 01.07.2012 to 31.03.2014 discharged the show cause notice that was issued for demanding service tax on the amount collected by the appellant towards administrative charges and inspection charges. The Commissioner Delhi in the order dated 02.03.2023 while adjudicating the two show cause notices issued for the period 2014-2015 and 2015-2016 has also discharged the show cause notice after relying upon the decision of the Tribunal and the Board Circular dated 23.08.2007. Appeal allowed.

Summary

Issues Involved:
The issues involved in the judgment are the demand of service tax on income received by the Employees Provident Fund Organisation (EPFO) under various heads, including administration charges, inspection charges, interest, and penal damages, for the periods from 2009-2010 to 2013-2014. The main contention was whether the services provided by EPFO to the employers in relation to asset management of various schemes were taxable under the category of 'banking and other financial services' and whether the income received was subject to service tax.

For the Period 2009-2014:
The EPFO, being a statutory body under the Ministry of Labour and Employment, functions under the provisions of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952. The EPFO administers various schemes and collects contributions from employees and employers, investing them as per government guidelines. The EPFO receives income under different heads from the employers, such as administration charges and inspection charges, in the course of its statutory activities.

The Department alleged that the income received by EPFO from employers for providing services related to asset management of various schemes was taxable under 'banking and other financial services' for the period up to June 2012 and under specific provisions of the Finance Act for the period from July 2012 to March 2014. Consequently, four show cause notices were issued demanding service tax, which were confirmed by the Commissioner.

Judicial Precedents and Decisions:
The appellant cited previous decisions by the Tribunal and the Supreme Court in similar cases where it was held that EPFO's activities are statutory duties and not taxable services. The Tribunal's order set aside the demand for the period 2009-2012, emphasizing that EPFO's functions were mandatory and statutory, not for consideration, and the income received was not related to taxable services. The Commissioner of Siliguri and Delhi also discharged show cause notices for the period 2012-2014, relying on similar legal principles and the Tribunal's decisions.

The Tribunal found that EPFO's activities were not liable for service tax as they were statutory obligations, and the income received was not in exchange for taxable services. The orders confirming the demand for service tax were set aside based on the legal precedents and the nature of EPFO's functions as a statutory authority.

Conclusion:
In conclusion, the Tribunal set aside the order confirming the demand for service tax on EPFO's income for the periods 2009-2014. The Tribunal upheld the legal position that EPFO's activities were statutory in nature and not subject to service tax, as the income received was not in consideration for taxable services. The appeal was allowed, and the order of the Commissioner was set aside, based on the legal principles established in previous decisions and the nature of EPFO's functions.