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2016 (10) TMI 656 - CESTAT MUMBAI

2016 (10) TMI 656 - CESTAT MUMBAI - TMI - Scope of exemption available to ‘commission agents’ - section 65(105)(zzb) - section 65(19) of Finance Act, 1994 - service of distribution of mutual fund - Held that: - It would appear that the service of distribution of mutual fund was not liable to tax before 9th July 2004 when the exemption available to ‘commission agents’ dealing in anything other than ‘agriculture produce’ was rescinded. The attempt to take the activity of agents of mutual funds out .....

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en remanded by the first appellate authority for disposal on merits. The authority empowered to decide on the refund application has chosen to use the investigation initiated by the Directorate General of Central Excise Intelligence to refrain from exercising its obligation under the Finance Act, 1994 read with section 11B of the Central Excise Act, 1944. This casual disposal is prone to further intervention by attempt to reclassify the nature of the service through the disposal of refund claim, .....

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t or to credit to the Fund if evidence of unjust enrichment could be presumed. Rejection would, certainly, have to be articulated in a speaking order with reasoned substantiation for that course of action. The rejection on grounds of being ‘pre-mature’ reflects either ignorance or unwillingness to act with responsibility. - The impropriety of the original authority can be remedied only by remand back to that official to consider the refund application on merit without awaiting the outcome of .....

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ST/85128/2013 - A/85842/16/SMB - Dated:- 18-2-2016 - Shri C J Mathew, Member (Technical) Shri Harish Bindumadhavan, Advocate for the appellant Shri A.B. Kulgod, Asstt. Commissioner (AR) for the respondent ORDER M/s Blue Chip Investment Centre Ltd, who describe themselves as commission agent , acts as intermediary between Asset Management Companies (AMC) and retail investors and, therefore, obtained registration as provider of business auxiliary services on 22nd January 2004. Business auxiliary .....

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of such sale or purchase . This notification was amended vide notification no. 8/2004-ST dated 9th July 2004 restricting the exemption only to commission agents in relation to sale or purchase of agriculture produce. 2. In the meanwhile, Department of Revenue issued circular no. 66/15/2003-ST dated 6th November 2003 clarifying that the exemption in notification no. 13/2003-ST was intended to cover commission agents dealing in goods and that, commission received by distributors of mutual funds sh .....

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estment Centre Ltd to get registered as a service provider and to pay ₹ 15,88.871/- on brokerage of Mutual Funds for the period from 1st July 2003 to 31st March 2004 after excluding trail fees and out of pocket expenses from their receipts. The Hon ble High Court of Delhi, in its decision in M/s Bajaj Capital Ltd v Union of India & others [WP No 6936/04 dated 7th May 2004], held this circular to be invalid. M/s Blue Chip Investment Centre Ltd sought refund of tax paid which was rejecte .....

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se Intelligence, M/s Blue Chip Investments Centre Ltd paid ₹ 44,41,574/- under protest by challan dated 28th February 2008 to cover trail fee and out of pocket expenses excluded from the computation of tax liability on the earlier occasion as well as the receipts on account of mutual fund distribution for the period from 1st April 2004 to 8th July 2004. Thereafter, a refund claim for the entire amount of ₹ 44,41,574/- was filed on 24th November 2008. The refund sanctioning authority .....

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ejection by the lower authority as correct in law. Aggrieved by this order, M/s Blue Chip Investment Centre Ltd is before this Tribunal. 4. In the grounds of appeal, appellant contends that that impugned order is violative of principles of natural justice as it has incorrectly stated that the appellant did not participate in the proceedings. The appellant asserts that their representative had attended the personal hearing on 19th January 2012 and furnished written submission; the observation of .....

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ervices is not correct in law. It was also submitted that the tax had been paid under protest before issue of notice by Directorate of Central Excise Intelligence and hence the rejection on the grounds of pendency of outcome of that investigation is incorrect. 6. Learned Authorized Representative stated that the notice issued by Directorate General of Central Excise Intelligence was yet to be adjudicated and sought that the matter be kept in abeyance till the outcome was known. Learned Counsel f .....

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emption notification that was available till then by issue of circular supra had been invalidated by the Hon ble High Court of Delhi in re Bajaj Capital Ltd as far back as May 2004 which has since been endorsed by the Hon ble Supreme Court in re M/s Karvy Stock Brokers Ltd. In these circumstances, the taxability of brokerage of mutual funds was left to quasi-judicial determination. 8. Admittedly, the appellant had paid taxes due till July 2004, along with interest, in two tranches to cover the e .....

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. This casual disposal is prone to further intervention by attempt to reclassify the nature of the service through the disposal of refund claim, in a manner that is contrary to the principles of natural justice and in direct contravention of the circular of Department of Revenue issued in 2007. 9. In the decision of this Tribunal in Persistent Systems Ltd v Commissioner of Central Excise & Service Tax, Pune III [Appeal no. ST/614/2010] it was noted: 6. Justification afforded for the act of r .....

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