9911796707
TMI Blog2017 (5) TMI 1302X X X X Extracts X X X X X X X X Extracts X X X X ..... travelers cheques, pre-paid cards, demand drafts and makes telegraphic transfers for travelers receiving its services and charges encashment services fees. In the process of issuing these instruments, the Respondent first buys foreign currency on its own and being the owner thereof, issues the above instruments. Respondents claim is that such activities of the respondent, being in the nature of money changing, were made liable to Service Tax from 16.05.2008 and the Respondent has duly paid Service Tax on the same therefrom. 4. For the period from October, 2003 to March 2009, proceedings were initiated against the respondent vide SCN dated 20.04.2009, in pursuance to audit of records of the Respondent. It was alleged that the said activitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd thus is in the nature of broking. c) Also non-imposition of penalty on the Respondent is improper. 7. The Ld. DR reiterated the grounds of appeal. Further, in his written submissions submitted on behalf of Revenue he emphasized the following points: i) The respondent have collected charges towards service charges encashment of travelers cheque, demand drafts, telegraph transfers, etc. They have also issued such instruments by collecting commission. In this process they acted as an intermediary between the Bank and tourists. Unlike money changers, who always hold the title for the of hard currency, the respondents can never hold the title for instruments such as travelers cheques. The CBEC vide their circular dated 06.10.2007 has cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the customer in the form of demand draft, travelers cheques etc. but all the foreign currency is already owned by the respondent. The fee charge is not in the nature of any brokerage. ii) The activities of the respondent are not covered within the definition of section 65 (105) (zm) until 15.05.2008. After the amendment to the above section w.e.f. 16.05.2008, the activity of the respondent became liable for service tax. The respondent has already paid the service tax w.e.f. this date. iii) Without prejudice to the above, it was also argued that the respondent has not suppressed any facts and they were under the bonafide belief that their activities were not in the nature of foreign exchange broking and hence service tax was not paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 other body corporate or commercial concern namely:- i), ii), iii).................iv) Securities and foreign exchange (forex) broking, and purchase or sale of foreign currency, including money changing. b) Foreign exchange broking and purchase or sale of foreign currency, including money changing provided by a foreign exchange broker or an authorized dealer in foreign exchange or an authorized money changer, other than those covered under sub-clause (a). Explanation: For the purposes of this clause, it is hereby declared that purchase or sale of fore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... change broking is the activity performed as an intermediary, on a commission/brokerage basis, for facilitating the clients who wish to buy or sell foreign exchange. The foreign exchange broker providing foreign exchange broking service does not hold title to the foreign exchange. Accordingly, Board is of the view that service tax is not leviable on money changing per se, as such activity does not fall under the category of foreign exchange broking. 3. The instruction issued earlier vide letter F. No.341/44/2005-TRU, dated 6-10-2005 [2006 (1) S.T.R. (C69)] stands superceded." 10. In the backdrop of the statutory provisions and clarifications as above, the issue to be examined is whether the activity undertaken by the respondent will be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmission is earned by the respondent. It is to be noted that the purchase of foreign exchange by the respondent is on their own account and not on behalf of the customer to whom it is ultimately transferred. To this extent, the respondent holds the title to the foreign exchange. Hence, we are of the view that the activity cannot be brought within the nature of foreign exchange broking. It is more in the nature of money changer who purchases foreign exchange and sells the same at prevailing rates. The amount charged by the respondent from customers for issuing letter of credit, demand draft traveler's cheque etc. is not earned by the activity of foreign exchange broking. In terms of the CBEC circular clarifying the issue dated 12.05.2007 suc ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
