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2020 (2) TMI 1493 - AT - Service TaxClassification of services - Banking and Financial Services or not - collection of fund amount from Coal Companies and the Coal Mine Workers and invest them in various Banks and Securities so as to ensure a good return and pay provident fund, pension, etc., to the Coal Mine Workers - extended period of limitation - interest - penalty - HELD THAT:- There are little force in the arguments of the appellant that they are not a Body Corporate, but a Government Department performing some functions because the very Act which created them and entrusted them with the power states that they are a Body Corporate. Section 3B of the CMPFMP Act,1948, specifically mentions that the appellant is a Body Corporate. Whether the appellant is covered by the definition of Banking and Finance Services? - HELD THAT:- As can be seen from the definition asset management including portfolio management, all forms of fund management, pension fund management, custodial, depository and trust services, are squarely covered by the definition of “banking and financial services”. The appellant’s organization functions under Board of trustees and under Section 3A of the Act it is a Body Corporate. Their responsibilities as evident from the submissions of the appellants themselves are nothing but funds management, for which they received service charges of @3% from the Coal Companies. Therefore, the appellant is squarely covered by the definition of “Banking and Financial services” and therefore, is liable to pay service tax under this Heading. Whether the appellants are performing services to the country? - HELD THAT:- Evidently, they are not performing any sovereign functions of the State. They are managing the some funds and performing some functions for the workers of Coal Companies and are getting paid for such services. These services rendered by the appellants, are not like the services of RTO of issuing driving license after charging a fees for the purpose or the State Drugs control who issues license for manufacture of pharmaceuticals after charging the requisite fees both of which are sovereign functions of the State. The appellant’s functions are akin to the activities of other commercial organizations owned by the Government, such as, Public Sector Undertakings, Public Sector Banks etc.. In all such organizations, while the nature of their activity is commercial, being owned by the Government, their business is so conducted to take in to account some social objectives and goals. This, by itself, will not make their activities sovereign functions or get them exempted from the tax. Once the Parliament has passed an Act imposing tax in a particular way that cannot be wished away by the appellant claiming noble objectives of their organization. Once a law is passed, it must be implemented as it is drafted without any intendment - the appellant is liable to pay service tax. Extended period of limitation - HELD THAT:- In this case, the appellant has not applied for service tax registration or paid service tax. There is nothing on record to show that the appellant had written to the Department intimating their activities and seeking to know if they are liable to pay service tax. On the other hand, when their activities were detected during Audit and the Department had written several letters and reminders, only then they obtained service tax registration. Even after obtaining the service tax registration, they have not paid the service tax nor filed any returns. This conduct of the appellant does not show their bonafides - It is the organization which has demonstrably evaded the tax to profit. It cannot now profit from its own wrong and escape tax liability - the invocation of extended period of limitation is fully justified in this case. Interest under Section 75 - HELD THAT:- As the interest under Section 75, is directly linked to the payment of duty, the interest must accordingly be paid by the appellant. Penalties - HELD THAT:- There are nothing inconsistent or wrong in the impugned order imposing statutory penalties under Sections 78,77 & 76 of the Finance Act, 1994, since the appellant has made every possible effort to knowingly evade tax. Appeal dismissed - decided against appellant.
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