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2017 (5) TMI 1302 - AT - Service TaxLiability of tax - money changing service - It was alleged that the said activities of the Respondent are in the nature of foreign exchange broking service - whether the activity undertaken by the respondent will be covered within foreign exchange broking or money changing? - Held that: - There were doubts in the field formations whether the services of foreign exchange broker will also include the activity of money changer who is an authorized dealer of foreign exchange. The CBEC vide their circular dated 06.10.2005 clarified that the services provided by money changers in relation to foreign exchange is covered within the services under section 65 (12). The activity cannot be brought within the nature of foreign exchange broking. It is more in the nature of money changer who purchases foreign exchange and sells the same at prevailing rates. The amount charged by the respondent from customers for issuing letter of credit, demand draft traveler’s cheque etc. is not earned by the activity of foreign exchange broking. In terms of the CBEC circular clarifying the issue dated 12.05.2007 such activity which falls within the nature of money changing, cannot be charged to service tax under section 65(12) read with 65 (105)(zm) for the period upto 15.05.2008. Consequently, the demand of service tax in this case is not sustainable and there is no infirmity in the impugned order dropping the service tax. The activity of foreign exchange broking liable to service tax under the provisions of FA has been explained and the activities of the respondent will fall within the said section from 16.05.2008 - appeal rejected - decided against Revenue.
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