2020 (6) TMI 257 - CESTAT, MUMBAI

Classification of services - Banking and Financial Services or not - non-payment of service tax on operational income received on account of transaction fees, custodial fees etc, by wrongly claiming exemption from service tax as per Board Circular No.B.II/1/200/TRU dated 09.07.2001 - HELD THAT:- Throughout Appellants were providing for “provision and transfer of information and data processing” and these are provided in relation to their depository operations. Thus the services provided by them to Depository Participants are covered by the definition of Banking and Financial services and are liable to service tax under that category.

Extended period of limitation - Held that:- Appellants have taken the stand that extended period of limitation cannot be invoked as the relevant facts were in knowledge of the revenue and hence they had not suppressed anything from the revenue authorities with the intention to evade payment of tax. They have relied upon various case laws on the subject. From the facts as available on record specifically the correspondences with CBEC, the issue involved in those correspondences were in relation to Central Depository Services and not in relation to services of providing for “provision and transfer of information and data processing”. - Demand confirmed invoking the extended period of limitation.

The benefit of “cum tax value” as per section 67(2) of the Finance Act, 1994 should be extended to the appellant’s while determining the tax payable. The Commissioner has erred in not extending the benefit of tax already paid by the appellant in respect of certain services sought to be taxed again in the present proceedings. Hence the matter for quantification of demands on the above lines need to be remanded back to the original adjudicating authority for denovo consideration.

Demand of Interest - HELD THAT:- Since the demand of tax made is upheld, the demand of interest made under Section 75 of the Finance Act 1994, is also upheld.

Penalties - HELD THAT:- The Penalties imposed under Section 75A, 77 & 78 of Finance Act, 1994 is justified but needs to be redetermined in light of re-quantification of demand in de-novo proceedings.

Appeal allowed by way of remand.