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2015 (6) TMI 625 - CESTAT MUMBAI

2015 (6) TMI 625 - CESTAT MUMBAI - 2015 (40) S.T.R. 528 (Tri. - Mumbai) - Nature of activity - collection of octroi on behalf of the Municipal Corporation - cash management activity or not - Banking and other Financial Services - Held that:- Reading the definition of banking and financial services and the meaning of financial institution, we have to hold that the services rendered by the appellant would not fall under the category of service provided by a banking or a financial institution or an .....

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the case in hand, we find that it is undisputed as to the appellant is only collecting an amount as octroi the vehicles, in which goods transported and octroi liability arises. In our view this will not encompass ingredients of cash management. In the absence of any cash management activity undertaken by the appellant, we find that the services rendered by the appellant will not fall under the category of banking and financial services.

Yet another angle to this case is that CBEC vid .....

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case in hand, as is recorded by us, it is undisputed that appellant is not financial institution. - Decided in favour of Assessee. - Appeal No. ST/230/2009-Mum, ST/334, 335/2010-Mum - Final Order Nos. A/1353-1355/2015-WZB/STB - Dated:- 12-5-2015 - M V Ravindran, Member (J) And P S Pruthi, Member (T),JJ. For the Appellant : Shri Vinay Kansara, Adv. For the Respondent : Shri K S Mishra, Additional Commissioner (AR) ORDER Per: M V Ravindran: These three appeals filed against Orders-in-Original No. .....

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the records. 3. The assessee is aggrieved by the Order-in-Original on the ground that the adjudicating authority has confirmed demand of Approximately ₹ 53.74 lakhs under the category of "Banking and other Financial Services" for the period June 2007 to March 2008 and upholding the allegation and the show cause notice that appellant was undertaking cash management. Revenue is aggrieved by the Orders-in-Appeal on the ground that the first appellate authority has set aside the Orde .....

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ver and above the contract amount is kept back by the appellant and in respect of transit fee, appellant is authorized to receive the 3% of the amount collected as transit fee as a consideration. He would submit that the lower authorities are held that the services would fall under the category of banking and financial services, which is incorrect as appellant is not a financial institution nor is he nothing banking financial corporation. He would then draw our attention to the definition of ban .....

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and financial services. He would also submits that the cash management as defined in Law Dictionary is "efficient management of cash in a business in order to put the cash to work more quickly and to keep the cash in applications that produce income and collect all the cash put to them". He would submit that the reliance placed by the adjudicating authority on the CBEC Circular No. 83/1/2006-ST, dated 4.7.2006 is totally incorrect as also on TRU Letter No. 334/1/2007-TRU, dated 28.2.20 .....

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mount as commission for rendering such services and hence it was covered under the category of banking and financial service. He would also submit that the Municipal Bodies cannot be called as State Government, as the definition of Central Government and State Government and local authority as given in General Clauses Act, would not be applicable in this case. He would submit that the definition of banking and financial services has undergone a change from 1.6.2007 wherein the activity of cash m .....

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the local municipal bodies. It is also undisputed that the appellant collects the octroi and deposits the same with the local bodies to the amount tendered by him. 9. Revenue authorities are of the view that such activity undertaken by the appellant would fall under the category of cash management as enshrined in the definition of banking and financial service. In order to appreciate the correct legal position, it is necessary to reproduce the said definition. [(12) "banking and other fina .....

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ii) such contract is for use and occupation of the asset by the lessee; (iii) the lease payment is calculated so as to cover the full cost of the asset together with the interest charges; and (iv) the lessee is entitled to own, or has the option to own, the asset at the end of the lease period after making the lease payment;] [(ii) **** (iii) merchant banking services; (iv) Securities and foreign exchange (forex) broking, and purchase or sale of foreign currency, including money changing;] (v) a .....

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issue of pay order, demand draft, cheque, letter of credit and bill of exchange, transfer of money including telegraphic transfer, mail transfer and electronic transfer, providing bank guarantee, overdraft facility, bill discounting facility, safe deposit locker, safe vaults; operation of bank accounts;] 10. We also find that the financial institution has been defined as under: "(c) "financial institution" means any non-banking institution which carries on as its business or part .....

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ying on of any class of insurance business; (v) managing, conducting or supervising, as foreman, agent or in any other capacity, of chits or kuries as defined in any law which is for the time being in force in any State, or any business, which is similar thereto; (vi) collecting, for any purpose or under any scheme or arrangement by whatever name called, monies in lumpsum or otherwise, by way of subscriptions or by sale of units, or other instruments or in any other manner and awarding prizes or .....

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ribunal in the case of Parag Parikh Financial Advisory Services Ltd. (supra) (wherein one of us was a Member) and it was held as under:- "To fall within the tax net, the appellant has to be a banking company or a financial institution including a non-banking company. Obviously, the appellant is not a banking company or a non-banking financial company. As per the definition of "financial institution", only when the appellant carries on business of acquisition of shares, bonds, debe .....

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ition of a financial institution. There is also no evidence available on record to show that the appellant has been registered under the RBI Act as a "Financial institution". In this factual and legal scenario, the conclusion of the lower authorities that the appellant is a financial institution as defined in the RBI Act cannot be sustained. Accordingly, we set aside the impugned order and allow the appeal with consequential relief, if any, in accordance with law". It can be seen .....

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in the definition of banking and other financial service; it is the case of the Revenue that the activity of the appellant would fall under the category of cash management. We do not agree with the findings recorded by the lower authority i.e. adjudicating authority inasmuch as the word 'Cash Management' is not only collection and deposit of cash. The cash management includes various activities as has been contended correctly by the Ld. Counsel, inasmuch, cash management involves somethi .....

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collecting an amount as octroi the vehicles, in which goods transported and octroi liability arises. In our view this will not encompass ingredients of cash management. In the absence of any cash management activity undertaken by the appellant, we find that the services rendered by the appellant will not fall under the category of banking and financial services. 11. Yet another angle to this case is that CBEC vide Circular No. 83/1/2006-ST dated 4.7.2006 while clarifying as to the services prov .....

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