TMI Blog2018 (8) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... ey were not getting earlier. This being so, levy of such charges are nothing but a penalty imposed on such account holders for keeping their account inoperative. Banks need a constant rolling of money and deposits, and inoperative or dormant account will not help this purpose. The dormant account charges are therefore nothing but a charge in the nature of penalty. Appeal allowed - decided in favor of appellant. - Appeal No. ST/480/2010 - FINAL ORDER No. 42214 / 2018 - Dated:- 10-8-2018 - Hon ble Shri Madhu Mohan Damodhar, Member ( Technical ) And Hon ble Shri P. Dinesha, Member ( Judicial ) Shri N. Quadir Hasyen, Advocate For the Appellant Shri A. Cletus, ADC (AR) For the Respondent ORDER Per Madhu Mohan Damodhar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of Bank Account is not applicable to Dormant Accounts. ii) Dormant period charges is a penalty for a customer who is not operating the bank account on regular basis and the purpose of the implementation of this charges for regulating the dormant bank account into an operative one (or) to eliminate those accounts from the system for the effective utilization of the other operative customers. iii) For this Dormant Period Charges, appellants are not providing any service to its customers rather they are collecting charges for agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act . iv) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice tax. 3. On the other hand, on behalf of the department, Ld. A.R Shri A. Cletus supports the impugned order and also submits as under : i) As per the definition of Banking and Other Financial Services in Section 65 (12) of the Finance Act, 1994, the financial services of operation of bank accounts is liable to service tax w.e.f.10.09.2004. The Dormant Period Charge is directly linked to the services provided by the bank to the customer by way of maintaining their inoperative bank accounts and by way of keeping such account in a dormant status in their operating scheme. ii) Hence there definitely is an element of service involved in keeping account in dormant status and this becomes part of the activity relating to maint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The deposits made by the banks from such account holder is then lent to borrowers at much higher rates of interest which is one of the sources of profit. Some of other income areas are interchange fees for use of credit cards, debit cards etc. Banks also get fees / charges for using ATMs etc. When the saving or current account has not had any transactions or activity for more than a specific period, the account is rendered inoperative by the bank and is subsequently declared dormant. On top of this, dormant account charges are imposed on such account holders and very often such charges are deducted from the balance of such account. The pertinent aspect that has to be considered is whether banks are providing a service by levying such char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ient (Business Auxiliary Service) nor is it an infrastructural support in the business of either the shipping lines or the customer (Business Support Service). Such charges can at best be called as penal rent for retaining the containers beyond the pre-determined period. Therefore, the amount collected as detention charges is not chargeable to service tax. 5.3 Eodem argumento, the dormant account charges levied on some of the customers are at best may be called penal charges and hence cannot form part of the taxable value. 5.4 An earlier order of the Tribunal in the appellant s own case, Final order No.40871/2017 dt. 2.6.2017, has been pointed out to us by the Ld.A.R. We however find that the issue involving therein was not r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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