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2020 (2) TMI 569 - AT - Service TaxService or not - appellant, Kerala Cooperative Deposit Guarantee Fund Board is constituted, under Kerala Cooperative Deposit Guarantee Scheme, 2012 for administration of Cooperative deposit fund, by Government of Kerala - whether the activity of the appellant is identical to the service rendered by Deposit Insurance And Credit Guarantee Corporation (DICGC) in the case of [DICGC [2015 (5) TMI 143 - CESTAT MUMBAI]? - HELD THAT:- In terms of Section 65 B (44) of Finance Act, 1994 “Service” is “any activity carried out by a person for another for consideration and includes a declared service “. Some exclusions are provided in the said Section itself like an activity constituting merely a transaction in money or actionable claim etc. - The appellant claims that they are not collecting any consideration for any particular service rendered but are only receiving contribution towards building a corpus fund and therefore, no service is involved. The collection of contribution to build a corpus fund to secure the depositors’ interest is not a mere transaction in money. The service rendered by the appellants does not find place either in the exclusion or in the Negative List. Therefore, the Learned Commissioner has correctly concluded that the activity undertaken by the appellants is not transaction in money. Further, Learned Commissioner referring to the Indian Contract Act, 1872 shows that the premium collected by the appellants constitutes a consideration as defined under Section 2(d) of the said Act. Learned Commissioner has relied upon the case of Deposit Insurance and Credit Guarantee Corporation. The appellants argued that “it would be pertinent to note that the analogy of the Deposit Insurance and Credit Guarantee Corporation of India (DICGC) does not apply in the instant case - the Tribunal in the case has gone into various aspects and have concluded that “it is clear that deposit insurance undertaken by the appellant falls within ambit of general insurance business defined in Section 65(49) read with Section 65(105)(d) of the Finance Act, 1994” - the activity of the appellant is same as that of DICGC and if DICGC is liable to pay Service Tax so is the appellant liable to pay Service Tax. Penalty - HELD THAT:- The appellants are a body constituted by the Government. There are a number of decisions by the Tribunal and Higher Courts that mens rea cannot be attributed to the Public Sector Units. The appellant is a body constituted by Government. Therefore, it is not expedient and necessitated to impose penalties. Therefore, while confirming the duty demand along with interest, the penalties imposed under Section 77 & 78 are liable to be set aside, by invoking the provisions of Section 80 of the Finance Act, 1994. Appeal allowed in part.
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