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2016 (1) TMI 974 - CESTAT MUMBAI

2016 (1) TMI 974 - CESTAT MUMBAI - TMI - Classification of Import of services from M/s. Society for Worldwide Interbank Financial Telecommunication (SWIFT) which is a non-resident entity, not having an office in India - reverse charge - service involved is transfer of information and also includes data processing - Banking and Other Financial Services or not - Held that:- We find that the very same issue has been decided by this Tribunal in the case of Bank of Baroda vs. Commissioner of Service .....

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1/2012 passed by Commissioner Appeals) Central Excise & Service Tax, LTU, Mumbai. 2. The fact of the case is that the assessee Union Bank of India (UBI) received certain services from M/s Society for Worldwide Interbank Financial Telecommunication (SWIFT) which is a non-resident entity, not having an office in India; that UBI was utilizing the services of SWIFT network essentially to transmit, financial messages internationally which culminated in foreign exchange remittance transactions get .....

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transfer of information and data processing" are liable to service tax from 16-7-2011. In the show cause notice, it was also contended that as per Rule 2(1)(d)(iv) of Service Tax Rules, 1994, as it existed w.e.f. 16-8-2002 and the subsequent introduction of Section 66 A of the Finance Act, 1994, the person liable for paying ST means -"in relation to any taxable service provided by a person receiving taxable service in India". Therefore, the liability to discharge ST on the said ta .....

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06 and in another appeal Vide OIA No. BPS/125/LTU/MUM/2012 dated 19/11/2012 the demand of service tax was set aside. Being aggrieved by the impugned orders dated 29/10/2010 and 19/11/2012, assessee as well as the department filed these appeals. The details of the appeals are as under: Sr.No Appeal No. Appellant OIA Period of Dispute Order Relief Sought 1 ST/73/11 UBI RT/63-64/LTU/MUM2010 dtd 29/10/2010 18/4/2006 to December 2009 Service tax Demand Confirmed for the period from 18/4/2006 Penalty .....

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and should be confirmed by the Commissioner (Appeals) for the period from 1/1/2005 to 18/4/2006 also 4 ST/85884/13 CCE, LTU, Mumbai BPS/125/LTU/MUM/2012 dated 19/11/2012 January 2010 to September 2010 Set aside the impugned order by dropping the demand. To set aside the order of the Commissioner (Appeals) 3. Shri Roopam Kapoor, Ld. Commissioner (A.R.) appearing on behalf of the Revenue reiterates findings of the impugned order inasmuch as Service Tax demand was confirmed. As regard the appeal of .....

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16 and the relevant findings of the Tribunal is as under: 5. We have carefully considered the submissions made by both the sides. The demand of service tax was confirmed on the appellant under the category of Banking and Other Financial Services. Definition of the same is reproduced below: "Banking and Other Financial Services" means Section 65 (12): (a) the following services provided by a banking company or a financial institution including a non-banking financial company or any othe .....

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nd portfolio research and advice, advice on mergers and acquisitions and advice on corporate restructuring and strategy; (vii) provision and transfer of information and data processing ; and (viii) banker to an issue services; and (ix) other financial services, namely, lending, 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 .....

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r person. (ii) Service is of - 'provision and transfer of information and data processing'. 7. We find from the impugned order that the appellant is receiving the services from SWIFT, the service involved is transfer of information and also includes data processing. As far as transfer of information, there is no dispute even by the appellant. As regard the provision of data processing the messages sent through SWIFT are encrypted and decrypted in SWIFT's central system and thereafter .....

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the carrier of such messages on a day to day basis. As per the information available on the SWIFT website, SWIFT provides the proprietary communications platform, products and services that allow their customers to connect and exchange financial information securely and reliably; SWIFT is solely a carrier of messages. It does not hold funds nor does it manage accounts on behalf of customers, nor does it store financial information on an on-going basis. As a data carrier, SWIFT transports messag .....

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fer of information contained in the said message after processing the data contained therein. Data processing in any computer is a process that converts data into information. The data contained in the said financial message when presented for processing is raw data which when processed become useful information for the customers viz. banks, financial institutions etc., who then use the said processed information to debit and credit the customers accounts accordingly, i.e., funds settlement betw .....

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and/or logically deduced and/or statistically calculated from the multiple data available from the said messages transmitted from BOB. Information is defined as either a meaningful answer to a query or a meaningful stimulus that can cascade into further queries. More generally, the term data processing can apply to any process that converts data from one format to another. From this perspective, data processing becomes the process of converting information into data and also the converting of da .....

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d presented with context, it can become information because it then has "value" to the recipient. Data which is not information is often called raw data. The terms "data", "computer network", "information" are defined under various provisions of the ACT read with the relevant definitions provided under the Information Technology Act, 2000. From the discussions above, it appeared that to facilitate transmission of financial messages, computer network system .....

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trieve the information contained in the said financial message, process the same and then transfer the processed information to the respective customers, i.e. presenting and recipient banks, financial institutions etc., as the case maybe. After the processing is complete in all respects, such processed data leads to settlement of funds between BOB and the recipient banks. It further appeared that messaging data through magnetic media or through communication backbone leads to data being transfer .....

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of the appellant that SWIFT does not fall under the category of 'banking and other financial institution's as SWIFT is not engaged in the business of banking and other financial services, we find that if any person provides the service which is covered under the four corners of definition of "Banking and Other Financial Services", it shall be taxable. Moreover there is no dispute that the SWIFT is a 'body corporate' and covered under the definition of 'Banking and O .....

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ng and Other Financial Services". The service shall remain taxable as the service is clearly covered under the definition of "Banking and Other Financial Services" in clause (vii) of Section 65 (12). Moreover the appellant being liable to pay the service tax is 'deemed service provider'. Therefore, the status of the appellant is required to be considered and not the status of service provider who is located outside India. For this reason the appellant is undisputedly the d .....

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t is not like club or Association and their members. In the judgments cited by the Ld. Counsel it was held that the subscription charges are not taxable whereas in the present case the appellant is paying service charges on the actual quantum of services received by them from SWIFT. Even in the case of club or association, if the members are paying for a specific service, the said payment in not exempted from service tax. What is not taxable is only the subscription charges paid by the members o .....

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ty does not exist in such transaction. The judgments cited by the Ld. Counsel stand distinguished in the above facts of the case. 7.6 As regards the submission of the appellant that present case is of revenue neutrality as the tax payable on the subject service is cenvatable, we are of the view that the bank is providing various services, some of the services are taxable and some are exempted. Therefore, it cannot be decided that the entire service tax payable on services of SWIFT can be allowed .....

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th the appellant, as there are two separate provisions, one is for the invoking extended prior i.e. proviso to Section 73(1) and other is Section 80 under which if a reasonable cause is shown, penalty can be waived. Therefore, merely because Section 80 was invoked, it cannot be said that proviso to Sec 73(1) shall not apply. Both provisions have separate ingredients. In the present case the appellant have not disclosed the data related to service charges paid to SWIFT to the department. Therefor .....

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