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The Commissioner of Central Excise Versus M/s. Syndicate Bank

2016 (11) TMI 524 - CESTAT BANGALORE

Cash management service - taxability - Business Auxiliary Service - Section 65(19) of the Finance Act, 1994 - Held that: - The Banking and Other Financial Services (BOFS) was included in the statute w.e.f 16.7.2001 under Section 65(12), however, the definition as it was initially introduced specifically excluded cash management services. The definition of scope of BOFS was further amended w.e.f 1.6.2007 when cash management service was specifically included under Clause (v). It is also on record .....

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vice tax at the hands of the Bank until 31.05.2007, the authorities cannot levy service tax on an activity which is essentially cash management service, by taking aid of other general charging heads, such as business auxiliary service. - Appeal dismissed - decided against Revenue. - ST/244/2007-DB - Final Order No. 21000 / 2016 - Dated:- 21-10-2016 - Shri S. S. Garg, Judicial Member And Shri V. Padmanabhan, Technical Member Smt. Ezhilmathi, AR For the Appellant Smt. Lalitha Rameswaran, CA F .....

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r the category of Business Auxiliary Service (BAS) under Section 65(19) of the Finance Act, 1994. The interest payable under Section 75 as well as penalties have been imposed. Aggrieved against this order, respondent-Bank filed an appeal before the Commissioner (A), who allowed the appeal in favour of the respondent-Bank vide impugned order dated 8.3.2007. Aggrieved by this impugned order, Revenue is before us in appeal. 2. The Revenue took the view that the activities of cash management referre .....

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and support services including customer care services, billing, collection or recovery of dues, accounts and remittances, evaluation of prospective customers, client surveys, public relation services, services as commission agent, etc. (ii) All such services shall include services as commission agent but shall exclude any information technology service, i.e., any service in relation to designing, developing or maintaining of computer software or computerized data processing or system networking .....

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submitted as under: (i) Banking and Other Financial Services (BOFS) was introduced in the statute w.e.f. 16.7.2001 under Section 65(12), however, the definition of the services from that date did not include cash management services. Cash management services were specifically included under Section 65 (12)(v) only w.e.f 1.6.2007 when its scope was expanded. Accordingly, their contention is that for the period prior to 1.6.2007 no service tax can be levied on this activity by bringing it under t .....

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ition as it was initially introduced specifically excluded cash management services. The definition of scope of BOFS was further amended w.e.f 1.6.2007 when cash management service was specifically included under Clause (v). It is also on record that from 1.6.2007, the appellant has been discharging service tax liabilities under BOFS. Revenue authorities have taken a view that for the period prior to 1.6.2007 such services would be covered by BAS. Prior to the amendment in Section 65(12) w.e.f. .....

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ortfolio management, all forms of fund management, pension fund management, custodial depository and trust services, but does not include cash management; (vi) Advisory and other auxiliary financial services including investment and 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) Other financial services, namely, lending, issue of pay order, demand draf .....

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the Hon ble Apex Court in the case of M/s. Federal Bank Ltd. (supra). The apex court held as follows: 8. A perusal of the write-ups supports the concept and meaning of cash management services appearing in the clarification letter of the CBEC dated 1-6-2007. 9. It is not in dispute that under Clause (12) of Section 65, there was a specific mention in sub-clause (v) to the effect that the banking and other financial services means asset management including portfolio management, all forms of fun .....

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eafter held that sub-clause (vii) of Clause (19) refers to only a service which is incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), but those activities in turn do not specifically relate to banking and other financial services. Rather such banking and other financial services are specifically covered by clause (12) of Section 65. 11. In that view of the matter, the High Court held that Clause (12) of Section 65 covers all charging services rendered by the Banks. The .....

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